Bush, Putin face tough tasks in farewell summit

By Matt Spetalnick and Oleg Shchedrov

SOCHI, Russia (Reuters) - President George W. Bush and Russia's Vladimir Putin will have one last chance on Sunday to try to mend frayed relations face-to-face but with little hope of resolving the biggest dispute that divides them.

In a farewell summit at the Russian president's Black Sea holiday villa, the two leaders -- both in the twilight of their terms -- will use their personal chemistry to try to bridge differences that have driven ties to a post-Cold War low.

Bush will also hold his first substantive talks with Putin's protégé and successor, Dmitry Medvedev, who will be sworn in as president on May 7.

The summit opened on a positive note after Bush's arrival at Putin's seaside retreat on Saturday as the two joined in a Russian folk dance during an informal dinner of red caviar and veal loin. But once the night's festive mood has worn off, the leaders still face a long list of grievances.

The thorniest issue is Bush's plan for a U.S. missile shield based in eastern Europe, a system Washington says is needed to protect against Iran but Moscow says threatens its security.

After holding out hope a deal on missile defense might be reached at Sochi, the White House all but ruled that out on the eve of Sunday's formal talks.

"We're going to have to do more work after Sochi," White House spokeswoman Dana Perino said on the Bush's Air Force One presidential jet as it headed to Russia. She called it "premature" to predict a deal though negotiations over compromise proposals were "headed in the right direction".

Despite that, Bush hopes to capitalize on a less strident tone struck by Putin at a NATO summit in Bucharest last week, where he attacked Western military expansion near Russia's borders but also implored: "Let's be friends, guys."