UPDATE 1-U.S. says trade with Russia should be much bigger

(Recasts, adds Russian FDI, background)

By Guy Faulconbridge and Robin Paxton

ST PETERSBURG, Russia, June 6 (Reuters) - The United States does less business with Russia than with Central America and annual trade should far exceed the current $27 billion, U.S. Commerce Secretary Carlos Gutierrez said on Friday.

"It could be a lot better, a lot stronger, a lot bigger. We are just getting started in terms of our commercial relations," Gutierrez told a panel discussion at the St Petersburg Economic Forum, Russia's main annual investor event.

"We should be doing a lot more trade with Russia," he said. "We do more trade with Central America -- a very small, relatively small community -- than we do with Russia, and Russia is a $1.3 trillion economy and growing very rapidly."

Russia expects to receive over $60 billion in foreign direct investment this year, much more than in 2007, Economy Minister Elvia Nabiullina told the same panel earlier.

Ministry data shows the United States is Russia's eighth-largest trading partner, far behind the more than $50 billion in bilateral trade last year between Russia and its largest trading partner, Germany.

One of Russia's richest men, the head of Renova investment company Viktor Vekselberg, told the same panel he also thought that Russian-U.S. trade could be much bigger.

"If I'm frank, they (trade relations) have significantly more potential than concrete and real achievements (so far)", he said.

Foreign businessmen in Russia say its booming economy offers huge opportunities but that one of the biggest obstacles to increased investment is the country's negative image abroad and concerns about the rule of law and judicial independence.

Gutierrez said U.S. companies had invested $16 billion in Russia to date, while Russia has invested $5 billion in the other direction.

"That could be a lot more. That could be a lot more business ownership and a lot more jobs," the commerce secretary said. "Russia is one of the fastest growing economies in the world".

Russian steel makers, led by Severstal (CHMF.MM) and Evraz Group HK1q.L, are among the largest Russian investors in the U.S. economy, having accumulated almost 10 percent of U.S. steelmaking capacity in the last few years.

LUKOIL (LKOH.MM), Russia's second-largest oil company, has opened about 2,000 filling stations in the United States. U.S. oil major ConocoPhilips (COP.N), in turn, owns a 20 percent stake in LUKOIL.

Other U.S. oil companies are among the leading investors in Russia, including ExxonMobil (XOM.N), which leads the large Sakhalin-1 project off the country's Pacific coast. (Reporting by Robin Paxton and Guy Faulconbridge, writing by Dmitry Zhdannikov and Michael Stott; Editing by Gerrard Raven)