Mr Putin and Mr Bush will have much to talk about this weekend

Top level US and Russian negotiators were expected to resume talks ahead of the summit, which Russia is hosting.

Russia is eager to join the WTO, but US officials have warned that differences still remain between the two sides.

Moscow needs Washington's backing to join the 149-member group, and hopes to reach a deal during the G8 summit.

Energy-rich Russia is currently the only major power not to be a member of the WTO, which sets and regulates global trade rules.

A deal could unlock plans for huge US investments in Russian oil and gas fields.

Foreign investors are looking for certainty that the products they produce could be freely exported; and once in the WTO, no member would be allowed to discriminate against Russian products on international markets.

US demands

"Both sides still have important unresolved issues," said Sean Spicer, a spokesman for US Trade Representative Susan Schwab. "There will only be a deal when those issues are satisfactorily addressed by both nations."

There are some important issues still on the table and there is no resolution at this point Sean Spicer, US Trade Representative spokesman

Talks would continue between Ms Schwab and Russian economy minister German Gref throughout the day, he said.

On Thursday, the discussions gathered pace after a chief Russian negotiator said the US had dropped demands for foreign banks to be allowed to open branches in Russia.

In exchange, Russian said it would give foreign insurers greater access to its market.

However, differences still remain on a number of key issues, including the protection of intellectual property rights in Russia and tariffs on aircraft imports.

Energy talks

"There are some important issues still on the table and there is no resolution at this point," said Mr Spicer.

US President George W Bush, who arrived in Russia on Friday after talks with German Chancellor Angela Merkel, has said he intends to press summit host Vladimir Putin on Russia's record on opposition parties and the media.

The three-day summit, which officially begins on Saturday and will bring together the leaders of Britain, Canada, France, Germany, Italy, Japan, Russia and the United States, is mainly expected to focus on energy security, terrorism and the escalating situation in the Middle East.

Leaders of the world's major developing nations, including China, India and South Africa, are also expected to attend the summit.

The lack of progress on the stalled world trade talks, the so-called Doha Round, which are aimed at improving market access for poor countries, are expected to be the centrepiece of discussions with developing country leaders.