By Alexei Anishchuk and Thomas Escritt
AMSTERDAM (Reuters) - President Vladimir Putin defended Russia's treatment of homosexuals on Monday in Amsterdam, where 1,000 gay rights activists waved pink and orange balloons and blasted out dance music to press home their protest.
Western nations need Russia for energy and as a market for exports but are uneasy about Putin's human rights policies and his treatment of opponents in his new Kremlin term.
Putin's visit to the Netherlands and Germany, Moscow's biggest trade partners in Europe, also comes at an awkward time after a wave of state inspections of foreign-funded non-governmental organizations in Russia that has been much criticized abroad.
In Amsterdam, Dutch and Russian companies signed a batch of energy deals and Putin met Queen Beatrix and Prime Minister Mark Rutte, while around 1,000 protesters blew whistles, played loud music, and waved the gay pride flag nearby in the city famous for its liberal attitude.
Putin, who laughed off a topless protest earlier in the day in Germany, said Russia did not discriminate against gay people.
"In the Russian Federation - so that it is clear to everybody - there is no infringement on the rights of sexual minorities," he said.
"These people, like everyone else, enjoy all the same rights and freedoms as everyone else," he told a news conference - held at Amsterdam's Maritime Museum in a nod to the days when Peter the Great worked as a young man in an Amsterdam shipyard.
Russia's parliament has given preliminary approval to a ban on "homosexual propaganda" targeting minors, which critics say would effectively ban gay rights demonstrations. The United States has said the legislation "severely restricts freedom of expression and assembly".
Many houses and bridges in the historic canal district of Amsterdam were draped with banners and the rainbow flag of the gay pride movement, protesting about what human rights organizations say is institutional repression of gays in Russia.
"Putin go homo," read one, echoing the message "Putin go home" on the front page of Friday's NRC Next daily newspaper.
"I'm protesting against the anti-gay law in Russia because it's unreal. You can't tell people to go back into the closet," said one protester, who gave his name as Connie Feather, dressed in a rainbow striped chiffon dress and blue feather boa.
Earlier, in Germany, three members of the women's rights group Femen, which has protested against Russia's detention of the feminist punk band Pussy Riot around Europe, disrupted his visit to a trade fair in the German city of Hanover.
They stripped to the waist and shouted slogans calling Putin a "dictator" before being bundled away by security men.
"Regarding this performance, I liked it," grinned Putin at a joint news conference with German Chancellor Angela Merkel. "I did not catch what they were shouting, I did not even see if they were blondes, brunettes or chestnut-haired ..."
Putin, who began his six-year third term as president last May, arrived in Amsterdam, after holding talks with Merkel.
They want to further boost booming economic ties but the German leader also repeated her concerns about human rights in Russia after raids by Russian authorities on German and other non-governmental organizations based in the country.
A new Russian law requires NGOs to register as "foreign agents" if they have foreign funding and are deemed to be involved in politics, something many groups have refused to do, saying they are not acting on behalf of other nations and are not trying to influence Russian politics.
For many, the term evokes Soviet-era oppression and Cold War espionage.
"This is about NGOs being able to work well and freely ... A lively civil society can only emerge when individuals can operate without fear or worry, of course on the basis of law," said Merkel, who grew up in communist East Germany.
Putin, a former KGB agent who worked in East Germany in the 1980s and speaks fluent German, denied the Kremlin was trying to muzzle NGOs and said Moscow just wanted to monitor the amounts of foreign funding coming into Russia.
"All our actions are connected not with closing and forbidding (foreign-funded NGOs in Russia), but with monitoring financial flows that go to non-governmental Russian organizations which are involved in internal political activity, and this money comes from outside of the country," he said.
"Regarding the freedom of work of these organizations, it is not limited at all. They only have to register."
(Additional reporting by Andreas Rinke, Steve Gutterman in Moscow; Writing by Gareth Jones and Sara Webb; Editing by Alison Williams)