Russian President Vladimir Putin has said he favours European involvement in helping to bring peace to Chechnya.
Putin and Schroeder have developed a good rapport
Speaking during a visit to Germany, Mr Putin said he had received proposals to involve Germany and the EU in a Chechnya peace settlement.
"We would like to accept them wholly and completely," he said, without elaborating. Russia has been fighting Chechen separatists for a decade.
Mr Putin is holding wide-ranging talks with Chancellor Gerhard Schroeder.
On Ukraine, Mr Putin said he could work with Viktor Yushchenko, the pro-Western candidate who is widely tipped to win the presidential election re-run on Sunday, following huge protests by his supporters over alleged ballot fraud.
Mr Putin had earlier strongly backed the more pro-Russian candidate in the election, Viktor Yanukovych, congratulating him on victory despite the widespread allegations of fraud. On this occasion, he stopped short of openly backing either candidate.
Mr Putin and Mr Schroeder on Tuesday travelled from Hamburg to Schleswig on the Danish border by high-speed Intercity Express (ICE).
Upon arrival they announced a 1.5bn euro ($2bn) deal envisaging the use of ICE trains on the railway linking Moscow and St Petersburg.
Mr Putin also announced Russia's intention to repay its $18.7bn debt to Germany earlier than scheduled.
In Schleswig, Mr Putin was met by a group of protesters holding a sign saying "Stop the war in Chechnya".
Later, addressing journalists in fluent German, Mr Putin insisted there was no war in the breakaway Russian republic.
"There has been no more war in Chechnya for three years," he said.
"It is over. You can go home. Merry Christmas."
Speaking in Hamburg on Monday, Mr Putin said Russia had "received proposals via certain channels for a larger involvement of Germany and the EU to solve the Chechnya problem".
"We would like to accept them wholly and completely," he said.
Quoting unnamed German officials, the Associated Press said Mr Putin could be referring to a suggestion brought to Moscow last month by a German government envoy for opening a dialogue on ways to reconcile the fight against terrorism with democratic norms.
Such talks would also involve the prospect of EU economic aid to the Caucasus region, the agency was told.
Human rights groups have reported widespread human rights abuses during Russia's crackdown against Chechen separatists.
The Kremlin has dismissed an initiative by the Russian Union of Soldiers' Mothers Committees, who wanted to serve as mediators between the government and Chechen rebels.
Their meeting with the London-based Chechen rebel envoy Akhmed Zakayev in Brussels was cancelled after Belgium threatened to extradite Mr Zakayev to Russia.