Japanese Prime Minister Yasuo Fukuda has met Russia's outgoing and incoming presidents on a visit to improve bilateral ties with Moscow.

During the talk, Russian President Vladimir Putin said Russia is willing to continue negotiations with Japan on a peace treaty.

"For the last two to three years we have managed to qualitatively change our relations. We are continuing the dialogue on the peace treaty and we have created the necessary conditions for moving along this way. The volume of trade and economic ties has increased five-fold in the course of the last four years, since 2004.''

Russia and Japan have never signed a peace treaty formally ending the Second World War due to territorial disputes over four islands.

The four islands, known as the Southern Kurils in Russia and the Northern Territories in Japan, were seized by Soviet troops after the end of World War II and are currently under Russian control.

Earlier on Saturday, Fukuda made a speech at a Moscow school where Japanese is taught.

"I hope Japanese-Russian relations will become more honest, and I hope for the further development of Japanese-Russian relations, including in the political, economic, and cultural spheres."

Fukuda also met with president-elect Dmitry Medvedev.

The Japanese prime minister arrived Moscow on Friday for a two-day visit, his first to the country since his election in September.