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Russian President Vladimir Putin visits a polling station during a parliamentary election in Moscow, Russia, September 18, 2016. REUTERS/Grigory Dukor

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BERLIN (Reuters) - German Economy Minister Sigmar Gabriel, heading to Moscow for talks about trade with President Vladimir Putin, said on Wednesday he favoured lifting EU sanctions on Russia but that would require progress on peace in Ukraine.

The European Union imposed the sanctions after Russia annexed Ukraine's Crimea peninsula in 2014. Soon afterwards, conflict broke out in eastern Ukraine between government forces and separatists, but a fragile ceasefire is in force under the so-called Minsk agreement which Germany helped to broker.

"I am doing what I can so that the sanctions, imposed after the annexation of Crimea, can be lifted step-by-step, and in the same measure as there is tangible progress in implementing the Minsk agreement," Gabriel said.

"If that succeeds, we can start to ease relations that would help both sides," he said, adding that German-Russian economic ties had great potential. Trade between the countries fell by 13.7 percent in the first half of this year.

Gabriel's Social Democrats are junior partners to Chancellor Angela Merkel's conservative bloc in Germany's coalition government, with an election due a year from now. He has taken a more conciliatory stance towards Moscow than Merkel, who says Russia must do more to help the shaky Ukraine peace process.

The conservatives - Merkel's Christian Democrats (CDU) and their Bavarian allies, the Christian Social Union (CSU) - pushed back after Gabriel's comments.

"The CDU/CSU parliamentary group cannot understand the remarks by minister Gabriel on the sanctions against Russia being phased out," said Juergen Hardt, the group's foreign policy spokesman.

"We strongly support the view of the G7 countries, that a lifting of the sanctions is coupled to the full implementation of the Minsk agreement."

Russia has retaliated against the sanctions by banning food imports from a range of Western countries including the EU.

"My trip to Russia takes place when we have a very tense situation with no quick or easy results expected," said Gabriel, who is taking a business delegation with him to Moscow.

"But for that very reason, isolation and confrontation offer no prospects and are not a sensible policy."

(Reporting by Rene Wagner; Writing by Madeline Chambers; Editing by Mark Trevelyan and Robin Pomeroy)

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