MOSCOW Russian President Vladimir Putin said on he "shared the concern" of those who opposed selling farmland to foreigners as the country moves closer to legalizing the private holding of agricultural lands.

Putin's comments came two days before the state Duma Lower House of Parliament was due to vote on amendments to a new farmland bill that would only allow foreigners to lease rather than purchase Russian agricultural holdings.

"The issue of the purchase of land by foreign citizens and legal entities causes the most difficult discussions," Putin said in an address to the Russian Chamber of Industry and Commerce.

"I know that this issue causes concern for Russian business circles, and has been actively raised by Russian governors" and members of the two houses of Parliament, Putin said.

"The discussions have shown that we must take a well-balanced, accurate, extremely careful approach to solving this issue," he said.

"I share and understand the concerns voiced by those who do not want to hurry over giving foreigners the right to purchase land.

There is no direct economic reason to do that," Putin concluded.

Russian deputies last month approved in the first of three readings a controversial bill allowing the sale of farmland for the first time since the 1917 revolution, but the communists warned of a fierce battle ahead.

The current version of the legislation only forbids foreigners from purchasing land around national borders and near sensitive government facilities.

But lawmakers said that government now backed an amendment that would allow foreigners only to lease the land for periods of up to 49 years.

An alternative proposal would allow Russia's 89 regions themselves to decide whether to sell land to foreigners -- but deputies said that option had less support from Prime Minister Mikhail Kasyanov's government and the Kremlin.

"We must ban the sale of land to foreign entities.

That is our main demand, and we have agreed this point with both the government and the Kremlin Administration," said lawmaker Vladimir Averchenko of the pro-government People's Deputies Party.

"We can now safely say that this will become the law," Averchenko told AFP.

As expected, Western investors in Russia took a dim view of the news, suggesting that such a ban would be both counterproductive and ineffective.

"This decision is extremely disappointing, and somewhat futile," said Alexei Moiseev of the Renaissance capital investment bank.

"After all, it is clear that all a foreigner who wishes to buy land needs to do to circumvent this prohibition is to register a Russian subsidiary, which is a very straightforward task," Moiseev wrote in a research note.

He added that the Russian agriculture sector was starved of foreign investment and that the legal sale of land to Westerners could only revitalize a sector that has struggled for several decades.

"An adoption of a discriminatory and easily by-passable measure simply undermines the government's efforts to improve the investment climate in the country," the banker said.