US President George W Bush and Russian President Vladimir Putin are having more talks at the Bush family holiday home in Kennebunkport, Maine.
Ties have been strained, particularly over US plans to put parts of a missile defense system in eastern Europe, and the talks are aimed at easing tensions.
The two leaders took a speedboat ride together before a Maine-style dinner.
In Maine, Mr Bush praised new British PM Gordon Brown for his "very strong" response to recent terror attacks.
"It just goes to show the war against these extremists goes on," he said.
The US has increased its airport security and added more air marshals to international flights, but not raised its alert level.
'Friendly spirit'
Mr Bush and Mr Putin are spending two days together at the seaside retreat.
As Mr Putin arrived, more than 1,000 demonstrators protested nearby, criticizing his policy on Chechnya and calling for Mr Bush to be impeached over the war in Iraq.
Officials have stressed that the meeting between the two leaders is informal.
Before he left Russia, Mr Putin said he was looking forward to "friendly" talks with Mr Bush.
"I hope that the dialogue with this person with whom I've formed good, I would say friendly relations, will take place in exactly that spirit," Russian news agency Interfax quoted him as saying.
The BBC's James Coomarasamy, in Kennebunkport, says officials from both countries are lowering expectations for any major policy breakthroughs.
For the US side, the talks are about restoring a sense of trust to a relationship which of late has become increasingly fractious, our correspondent says.
'Megaphones'
Earlier this week, Nato Secretary General Jaap de Hoop Scheffer urged Russia and the West to tone down their rhetoric, saying there was "no reason to speak with megaphones".
Russia has expressed anger at the proposed US missile defence shield - particularly plans to site a radar in the Czech Republic and 10 anti-missile interceptors in Poland.
Nato and the US say the facilities would not be directed as Russia, but at "rogue" states such as North Korea and Iran.
But Mr Putin recently warned that Russia would target its missiles back at Europe if Washington went ahead with the program.
The UN-administered province of Kosovo is another issue on which the two sides disagree.
Western countries support a plan that would give the territory independence from Serbia, but Russia - which wields a veto in the UN Security Council - says further negotiations are needed.
President Bush is also expected to raise the issue of Iran, hoping to gain Russian support for wider economic sanctions aimed at pressuring Iran over its nuclear program.
PHOTO CAPTION
Mr Bush and Mr Putin in a speedboat