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European Commission President Jean-Claude Juncker attends a session of the St. Petersburg International Economic Forum 2016 (SPIEF 2016) in St. Petersburg, Russia, June 16, 2016. REUTERS/Sergei Karpukhin

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By Christian Lowe and Alessandra Galloni

ST PETERSBURG, Russia (Reuters) - European Commission President Jean-Claude Juncker defended his decision to attend an economic forum in Russia on Thursday by saying it was common sense to talk to Moscow despite lingering tensions over the Ukraine crisis.

His presence at the annual gathering in St Petersburg, the most high-profile event staged by the Kremlin to attract foreign investment, is the latest signs of a thaw in EU-Russian relations despite difficulties in implementing a peace deal in Ukraine.

Juncker held out little prospect that sanctions against Russia may be eased soon, however, a position likely to disappoint many investors in Russia and Western businesses eager to resume normal relations.

He said he was aware that some people might not approve of his visiting Russia at a time when EU sanctions on Moscow remain in place, but that he thought it was the right thing to do.

He said he was expecting "frank" talks with President Vladimir Putin on a range of subjects. "We can have no illusions about the problems weighing on our relationship today. They exist. It would be pointless, even dangerous, to ignore them. We must tackle them urgently," Juncker said.

UKRAINE THAW?

Juncker's visit follows other recent signs of a thaw in relations over Ukraine, despite slow progress in carrying out a peace deal between Kiev and pro-Russian separatists in the country's east.

Earlier this week Russia and Ukraine conducted a second prisoner swap, following the release in May of Nadiya Savchenko, a Ukrainian pilot and national hero.

EU diplomats have said the 28-nation bloc is certain to extend its sanctions against Russia when they come up for renewal next week.

On Wednesday, NATO Secretary-General Jens Stoltenberg said that a ceasefire agreement in Ukraine was "barely holding" and blamed Russia for continuing violations.

Nevertheless, some EU countries such as Italy and Greece have long argued for sanctions against Russia to be softened.

Pressure to that end is also growing within other EU countries, including among business interests eager to restore normal business connections with Russia.

Last week the French Senate overwhelmingly backed a non-binding resolution calling for a gradual and partial easing of sanctions - a contrast with the official position of the EU and leading Western governments, who say sanctions can only be lifted once the Ukraine peace deal is fully implemented.

While emphasising the importance of dialogue with Russia, Juncker appeared keen to avoid the impression that the EU had forgiven Russia's actions in Ukraine.

He said Russia's annexation of Ukraine's Crimea region and the conflict in and around eastern Ukraine had put the EU relationship with Russia to a severe test.

"Russia's actions have shaken the principles of European security. Sovereignty, sovereign equality, the non-use of force, and territorial integrity matter. They cannot be ignored."

Juncker also emphasised that the West was united on sanctions. "The next step is clear: full implementation of the Minsk agreements. This is the only way to lift the economic sanctions."

(Additional reporting by Gabriela Baczynska in Brussels; Writing by Jason Bush; Editing by Mark Heinrich)

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