UPDATE 1-Japan presses Russia for islands deal

(Releads, adds Japanese foreign minister's spokesman, details)

By James Kilner and Conor Sweeney

MOSCOW, April 14 (Reuters) - Japan pressed Russia on Monday to end a territorial dispute over a chain of Pacific islands which has prevented the two countries from formally ending World War Two hostilities and strengthening ties.

The dispute over the islands, known as the Southern Kuriles in Russia and the Northern Territories in Japan, has overshadowed Russian-Japanese relations for more than 60 years.

Japan says a resolution of the dispute would attract a new wave of Japanese investors to Russia.

Russia is keen for funds to develop its Far Eastern regions while Japan is eager to tap Russia's booming oil industry to reduce its reliance on the Middle East for its energy needs.

Kazuo Kodama, spokesman for Japanese Foreign Minister Masahiko Komura, said after talks with Russian counterpart Sergei Lavrov in Moscow that "both Japan and Russia agreed to conduct even more serious consultations and negotiations".

"In the end, our two foreign ministers agreed that with respect to peace treaty negotiations, first and foremost the territorial issue must be resolved," he told a news briefing.

Quoting directly what Komura told Lavrov, Kodama said: "We adopted a Japanese-Russian action plan in January 2003. ... In October, when I met Your Excellency, I emphasised that the continued discussion is not enough. We've got to make tangible progress."