Japanese Prime Minister Yasuo Fukuda signed the agreement with President Abdullah Gul, who is the first Turkish head of state to visit Asia's largest economy.

"The two leaders, recognising the economic potential of Turkey... expressed their continuous support for activities and efforts by the private sector to further promote economic relations," a joint statement said.

The two leaders also agreed to cooperate in building a new framework to fight climate change after the Kyoto Protocol's obligations expire in 2012.

Turkey is a holdout from the Kyoto Protocol, arguing that it needs to complete its industrialisation, despite pressure to join from the European Union.

Japan is the host country of the Kyoto Protocol but has been struggling to meet its commitments. It has pressed for the next climate treaty to cover both rich and developing nations.

The joint statement said Japan and Turkey "will be actively engaged in a process to establish an effective framework beyond 2012 in which the two countries will participate in a way commensurate with their international responsibilities."

They also reiterated their shared resolve to fight proliferation of weapons of mass destruction.

Trade volume between the two countries stood at 3.9 billion dollars in 2007, with Japanese exports to Turkey accounting for nearly 95 percent of it, according to Turkey's official statistics.