Al Jazeera English - News - Russia In Ukraine Missile Warning

"It's frightening not just to talk about, but even to think about, that in response to such deployment, the possibility of such deployments, that Russia will have to point its warheads at Ukrainian territory."

The Kremlin is already fighting plans by the US to deploy 10 missile interceptors in Poland and a radar in the Czech Republic which it says will threaten Russia's security.

Gas deal

Putin's comments came almost immediately after he had announced that he had approved a deal with Viktor Yushchenko, the Ukrainian president, over a gas bill for $1.5bn owed to Moscow.

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The two men had been holding talks in the Russian capital after Yushchenko flew there on Tuesday.

Ukraine will begin new payments on the debt from Thursday.

Gazprom, the Russian majority state-owned gas company, had extended to Tuesday evening its deadline for cutting a quarter of gas supplies to Ukraine after previous talks between companies from the two countries failed to resolve the dispute.

The meeting had been closely monitored in EU countries, who receive Russian gas through pipelines crossing Ukraine.

Nato invitation

In a separate development, it has been announced that Putin will attend a Nato summit in April, the first time a Russian leader will have taken part in such a meeting since Rome in 2002.

Yushchenko and Putin met in Kremlin on
Tuesday to sign the last-ditch deal [AFP]

Sergei Lavrov, Russia's foreign minister, said: "President Vladimir Putin has accepted an invitation to take part. This yet again testifies to the fact that Russia is open to dialogue on any issues.

"We are convinced that the trilateral Russian, American and European format contains huge potential in all spheres, linked to safeguarding security and stability."

Putin, who leaves office in May after his successor is elected in March, has accused Nato and the US of failing to respond to Russian security concerns.

"It is already clear that a new arms race is being unleashed in the world," Putin said at a state council meeting of ministers governors and parliament members in Moscow on Friday.

He said "we must not allow ourselves to be drawn into this" but that Russia will "always respond" to such challenges.