ISTANBUL (Reuters) - Turkey and Russia will establish a joint investment fund with capital of $1 billion, Turkish Economy Minister Nihat Zeybekci was reported as saying by state-run Anadolu Agency.

Relations between Russia and Turkey soured in November 2015, after the downing of a Russian fighter jet by the Turkish military.

They have since have made progress towards restoring ties, with Turkish President Tayyip Erdogan and Russian President Vladimir Putin holding talks. The two leaders were due to meet again on Monday in Istanbul at World Energy Congress meeting.

Zeybekci made the announcement at a ceremony to sign a joint declaration on establishing the fund after meeting Russian Economic Development Minister Alexei Ulyulkayev in Istanbul on Sunday, Anadolu said.

Zeybekci was reported as saying Turkish and Russian investment funds would both provide $500 million each for the establishment of the fund and its capital could be increased beyond $1 billion if needed.

(Writing by Daren Butler; Editing by Nick Tattersall)