THE German and Russian leaders have sparred over human rights questions during a summit in Moscow, as companies from the two powers signed major business deals.
German Chancellor Angela Merkel criticised Russia's jailing of three female members of the punk band Pussy Riot for performing a protest song in a Russian Orthodox cathedral in February.
Allowing that a similar stunt would have outraged Germans too, she added pointedly: "We are asking ourselves whether this is good for the development of Russian civil society or not."
Russian President Vladimir Putin, who has faced down unprecedented pro-democracy protests during the past year, defended the sentence handed down to the women.
In a joint press conference with Merkel, Putin accused the band of anti-Semitism and said he had heard that under German law the activists would have faced up to three years in jail.
Despite their differences on rights questions, energy-rich Russia and the European export power are major trade partners, with Germany reliant on massive Russian gas imports.
Germany is Russia's main trading partner, with two-way trade totalling 75 billion euros ($A92.40 billion) last year.
Merkel was joined in the annual meeting by a large delegation of cabinet members and industry heavyweights, who signed multi-billion-euro deals on Friday.
German engineering giant Siemens inked a memorandum of understanding for the sale of 695 train engines, worth 2.5 billion euros, with the Russian state railway RZD.
The German stock exchange operator Deutsche Boerse AG and Russia's Moscow Exchange signed a letter of intent designed to enhance co-operation between the two financial markets.
Putin also promised Russian support for the euro and voiced confidence that the eurozone debt crisis would be resolved, saying: "We are convinced that the difficulties will be overcome."
Nonetheless, the rights question clouded the summit, as it has darkened the Kremlin's relations with other Western powers, who are also upset by Moscow's and Beijing's support for the Syrian government.
Putin's government has tightened the screws on dissent, forcing non-governmental organisations that receive funding from abroad to register as "foreign agents" in a law passed in July.
On the eve of Merkel's visit, one group - the Union of the Committees of Soldiers' Mothers of Russia, which has uncovered scandals in the Russian military - said it would have to suspend operations, in part because of the new rule.
On Wednesday, Putin signed another law that stiffens provisions for treason, granting authorities wider powers to charge citizens with spying and to impose lengthy sentences.
Merkel, who faces an election in less than a year, was under pressure from her parliament to raise concerns about human rights.
The Kremlin leadership was irritated by a resolution passed last week in the German Bundestag that contained 17 demands related to democracy and human rights in Russia.
Meanwhile, Moscow's Kommersant newspaper reported that Russia's relations with Germany were "worsening without a doubt".
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