Dresden, Germany - Russian Prime Minister Vladimir Putin admits that his country has suffered severe damage to its image in the ongoing gas standoff with Ukraine.

"Large damages have been sustained, politically and economically," Putin told a group of German editors in Dresden after talks with German Chancellor Angela Merkel in Berlin.

Despite a series of agreements, Russian gas exports via Ukraine remained cut off for the 10th day Friday, leaving some European countries without sufficient fuel to heat homes and factories.

He said he is cautiously optimistic for a solution to the crisis when he meets with Ukrainian Prime Minister Yulia Tymoshenko for talks on energy in Moscow on Saturday. However, he said it would be difficult to achieve a solution with the Ukrainian government to a problem "that we have had for nearly 15 years and that we can no longer afford."

Following his talks with Merkel, Putin travelled to the eastern city of Dresden to pick up an award for promoting Russo-German cultural relations.

A German human rights group, the Society for Threatened Peoples, said Putin did not deserve the honour because of atrocities committed by Russian troops in Chechnya during his time as president. (dpa)