Russian President Dmitry Medvedev sought to deepen ties with a Caucasus ally on the second day of his first official visit to Armenia Tuesday.

Together with his host Serzh Sargsyan he participated in a ceremonial opening of Russia Square in central Yerevan attended by thousands of city residents before heading for talks with the Armenian leader.

(The square is situated near Yerevan municipality, the Moscow House and the statue of Myasnikyan – the area that saw the March 1-2 post-election riots).

Speaking at the event, Medvedev praised relations between the two states, saying that naming a square in Yerevan after Russia “confirms the absolute sincerity and genuineness of our fraternal feelings and testifies to the openness and depth of the two states’ relations.”

In his remarks, Sargsyan said that for the first time the Russian flag was raised in Armenia in 1827 on top of the fortress that used to stand near that square. It was also the place where prominent 19th century Russian diplomat and writer Alexander Griboyedov’s famous “Woe from Wit” play was for the first time staged. Both presidents called the square a symbol of friendship between the two nations.

Russia is Armenia’s main strategic partner on which the Caucasus republic relies for its security and energy. Russia, which is home to a large Armenian community, is also a major trade partner for Armenia.

Bilateral trade between the two reached $800 million in 2007 and grew in the first eight months of 2008 by 13 percent, compared to the same period last year. Since 1991, Russia’s aggregate investments into Armenia’s economy made $1.6 billion, with about $428 million invested only in the first half of 2008.

Russia’s leading companies in the energy, telecommunications, transportation and other spheres have a sizable share on the Armenian market.

Russia is also one of the three co-chairs, along with the United States and France, of the Minsk Group of the Organization for Security and Cooperation in Europe (OSCE), an international format advancing a peaceful settlement of the protracted Nagorno-Karabakh conflict.

Medvedev’s visit came only days after a trip by a top US diplomat to Yerevan. Assistant Secretary of State Daniel Fried’s visit against the background of a shifting geopolitical balance in the region was viewed by many observers as a sign of growing US-Armenian cooperation.

Speaking at a news conference in Yerevan Tuesday both presidents said, however, that relations between the two countries were developing steadily in virtually all spheres, including foreign policy, security, culture, economy and others.

Medvedev said that Russia is ready to have closer relations with Armenia within the framework of the Collective Security Treaty Organization, a Russian-led defense alliance of seven former Soviet republics.

“We spoke about the situation in the South Caucasus after the Georgian aggression against South Ossetia, our countries consistently advocate strengthening of peace and stability,” said Medvedev.

Regarding the Nagorno-Karabakh issue, the Russian leader said that the August events (in Georgia) showed that every intricate issue must be solved according to the norms of international law and on the basis of negotiations.