Silvio Berlusconi returned to the world diplomatic stage yesterday by hosting Russian President Vladimir Putin, flagging a friendship he said was beneficial to Italy and the world.

But the event lost some of its lustre when Vladimir Putin was prompted, before the glare of television cameras, to deny reports he had secretly divorced his wife and planned to marry an Olympic gymnast.

Mr Berlusconi, elected to a third term as Italian prime minister on Monday, welcomed the Russian leader to his holiday villa on the island of Sardinia, an informal setting meant to underscore the personal nature of their relationship.

After an evening of festivities on Thursday that included a comedy cabaret show, Mr Berlusconi and Mr Putin held a joint press conference and spoke of cooperation in the energy sector and possibly between their national airlines.

After months of speculation involving Aeroflot, Mr Putin said the Russian airline could restart talks about bidding for near-bankrupt Italian flag carrier Alitalia.

"Everything is made easier if there is a relationship of esteem, a relationship of confidence, a relationship of respect, a relationship of friendship," Mr Berlusconi, who is expected to take office in early May, told reporters.

He added that their deep friendship allowed both nations to better understand each other - something Mr Berlusconi said was in "the interests not just of our two countries but I believe of the entire world".

The pair forged a warm relationship during Mr Berlusconi's last term in office from 2001-2006, when his focus on Russia, Israel and the US isolated Italy within the EU.

Since winning the April 13-14 election, Silvio Berlusconi, a billionaire media mogul, has said he will help the EU regain the influence he said it had lost since he left power.

Mr Berlusconi said he wanted to expand ties that took a major step forward in 2006 when, under outgoing Prime Minister Romano Prodi, Italy and Russia struck an oil and gas partnership between Gazprom and Eni.

But the polished event took an unexpected turn at the beginning when a Russian newspaper journalist asked Mr Putin about media reports he had divorced his wife, Lyudmila, and would marry 24-year-old Russian Olympic gymnast Alina Kabayeva.

"In what you said, there is not one word of truth," the 55-year-old Putin said. "I have always reacted negatively to those who with their snotty noses and erotic fantasies prowl into others' lives."

The former KGB spy has kept his private life out of the media and reports about his family life are very rare in the mainstream Russian media, which is careful to follow Kremlin guidance on their coverage.

Mr Berlusconi joked that maybe Mr Putin could swap the Russian press corps for the Italian one, and pointed with his index fingers toward the Russian newspaper journalist using what Italian media described as a pistol-like gesture.

"A playful gesture is a playful gesture and nothing more," Mr Berlusconi's spokesman Paolo Bonaiuti was quoted as saying by AGI news agency.

Mr Berlusconi is a frequent critic of the news media and quipped this week that Italy would be better off without newspapers.

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