MOSCOW - U.S. President Barack Obama and Russian President Dmitry Medvedev signed a preliminary agreement Monday to reduce the world's two largest nuclear stockpiles by as much as a third, down to the lowest levels of any U.S.-Russia accord, and to counter what Obama called "a sense of drift" in the countries' relations.

"We must lead by example, and that's what we are doing here today," Obama declared in a Kremlin hall glittering in gold. "We resolve to reset U.S.-Russian relations so that we can co-operate more effectively in areas of common interest."

The document signed by the two leaders at the summit, Obama's first in Russia, is meant as a guide for negotiators as the countries work toward a replacement pact for the START arms control agreement that expires in December. The joint understanding also commits them to lower longer-range missiles for delivering nuclear bombs to between 500 and 1,100.

The limit for warheads would be in a range of 1,500 to 1,675 each. However, there are disagreements on what to count.

Medvedev called Monday's agreement a "reasonable compromise."

A White House statement said the new treaty "will include effective verification measures" and Obama said it would be completed by the end of the year. He also held out hope to "move even beyond that in subsequent agreements and treaties" and said he wanted to host a summit on global nuclear security next year in the United States.

More broadly, Obama needs Russia's help in pressuring Iran and North Korea to give up their nuclear weapons ambitions, and also in tackling terrorism, global warming and worldwide economic woes. But ties are frayed over Moscow's war in Georgia last year and the U.S. plan for a new missile defence system in Eastern Europe, so Obama's desire to move forward is a huge test of his diplomatic skills.

"The president and I agreed that the relationship between Russia and the United States has suffered from a sense of drift," he said at Medvedev's side. "President Medvedev and I are committed to leaving behind the suspicion and rivalry of the past."

His host expressed similar good will.

"This is the first but very important step in improving full-scale co-operation between our two countries, which would go to the benefit of both states," the Russian leader said. Injecting a note of caution, he said that discussions so far "cannot remove the burden of all the problems."

The two leaders appeared together at a news conference where they and other officials from both countries signed and exchanged documents with great flourish and much handshaking.

Among the side deals meant to sweeten Obama's two days of talks here and show progress toward improving badly damaged U.S.-Russian relations was permission from Moscow for the United States to transport arms across its land and airspace into Afghanistan for the war there. Obama said the deal will save the U.S. "both time and money," to the tune of $133 million a year, by waiving transit fees and shortening flying time.

They outlined other areas in which they said their countries would work together to help stabilize Afghanistan, including increasing assistance to the Afghan army and police, and training counternarcotics personnel.

Among other agreements was the resumption of military co-operation, suspended after Russia invaded neighbouring Georgia last August and sent relations into a nosedive.

The leaders also promised fresh co-operation on public health issues and revived a joint commission to try to account for missing service members of both countries dating back to the Second World War. The commission was first created in the early 1990s, but the Russians later downgraded their participation. The U.S. hope is that the Russians will now open some of their more sensitive archives to U.S. researchers seeking details about missing American servicemen.

Yet the two sides remain stalemated over the U.S. pursuit of a missile-defence system in Europe, pushed aggressively by president George W. Bush and still under review by Obama's 7-month-old administration. Both sides hardened their positions ahead of the summit, and Obama gave a lengthy rationale for the system at Medvedev's side.

Obama suggested the United States has a right to pursue defensive systems separate from the offensive weapons that are the subject of most arms control negotiations. Obama repeated the U.S. position that the planned system is aimed at intercepting missiles from Iran and has nothing to do with countering "a mighty Russian arsenal," as many in Russia suspect.

Medvedev called it "a difficult area for our discussion," but suggested that the new openness between the two countries could help.

Obama said he trusts the Russian leader to follow through on the agreements they struck. And he refused to be drawn into a debate over who really holds the reins of power in Russia, widely believed to be Medvedev's predecessor and mentor, Prime Minister Vladimir Putin. "My understanding is, President Medvedev is the president ... and Prime Minister Putin is the prime minister," Obama simply said.

Obama, who meets with Putin on Tuesday, caused a stir in Russia before his trip by telling The Associated Press that Putin has to learn that "the old Cold War approaches to U.S.-Russian relations is outdated."

The summit starts a weeklong trip for Obama that also features G-8 meetings and a visit with the pope in Italy, and a speech in Ghana.

After Obama landed in Moscow under drizzly grey skies, he introduced his wife, Michelle, and their two daughters to Russian officials waiting to greet them. The entourage then headed to a wreath-laying ceremony at Russia's Tomb of the Unknown Soldier.

Having enjoyed adoring crowds in other parts of Europe, Obama will face a far more skeptical Russian population. He will outline his vision for U.S.-Russian relations at a speech Tuesday at the New Economic School.