* Former U.S. spy contractor seeks temporary asylum
* Putin says U.S. ties more important than spy sagas
* Snowden's fate poses dilemma for Putin
President Vladimir Putin gave his clearest signal yet that he will not let a dispute over the fate of former U.S. spy contractor Edward Snowden derail Russia's relations with the United States.
Snowden, who is wanted by Washington for leaking details of U.S. intelligence programmes, is seeking temporary asylum in Russia after spending more than three weeks at a Moscow airport trying to fly to a country that will shelter him.
Allowing the American to stay in Russia even temporarily would upset Washington. But a refusal would open Putin to criticism at home that he has not stood up to Moscow's former Cold War enemy, even though he has refused to extradite Snowden.
Asked during a visit to the eastern Siberian town of Chita whether the affair would cast a shadow over a U.S.-Russia summit due in September in Moscow, Putin told reporters on Wednesday: "Bilateral relations, in my opinion, are far more important than squabbles about the activities of the secret services."
Putin did not say whether Russia would grant Snowden's temporary asylum request, but made clear he was still insisting the American must agree to do nothing to harm the United States.
"We warned Mr Snowden that any action by him that could cause damage to Russian-American relations is unacceptable for us," Putin said.
Russia would take an independent decision when deciding on Snowden's fate, but maintaining relations with Washington was also a "national objective", the president added.
Snowden is useful as a propaganda tool for Putin, who accuses the U.S. government of preaching to the world about rights and freedoms it does not uphold at home.
But Putin wants the summit with Obama to go ahead and both countries have signalled they want better relations, strained by issues ranging from the Syrian conflict to Putin's treatment of opponents since he started a six-year third term in 2012.
A Russian lawyer helping Snowden with his request for temporary asylum said on Wednesday he expects Snowden will soon be able to leave Sheremetyevo airport, where he has remained in the transit zone since his arrival from Hong Kong on June 23.
Anatoly Kucherena told Reuters he believed the American would be able to leave the transit zone, which Moscow considers neutral territory, within a week, and indicated he expected him to stay in Russia for the time being.
Kucherena said on Tuesday that Snowden had given him a verbal promise that he would stop anti-U.S. activities.
But a human rights activist who attended a meeting with Snowden on Friday said the American did not regard his leaks as harmful to his home country. Snowden has said that he was acting in U.S. interests, not against them.
Snowden, 30, says the United States has prevented him from flying to Latin America - where Nicaragua, Bolivia and Venezuela have offered him refuge - by putting pressure on other countries not to help him escape U.S. justice.
Putin has also accused the United States of trapping Snowden, but Russia has kept the former contractor at arm's length by saying it regards the transit area between the runway and passport control as neutral territory.
"Mr Snowden, as I understand it, never intended to stay here, in Russia, forever. He has even said so himself," Putin said. He added that he did not know what Snowden's long-term plans were and said: "It is his fate and his choice."
Putin said rights advocates knew they could face certain costs for their activities, and it often became particularly "complicated" if they criticised the United States.
"The example with the Bolivian president's plane showed this," he said, referring to a decision by four U.S. allies in Europe to prevent Evo Morales' plane entering their airspace this month because they thought Snowden was on board.
President Barack Obama's administration on Tuesday repeated its call for Russia to send Snowden back to the United States.
"He is not a human rights activist, he is not a dissident. He is accused of leaking classified information," White House spokesman Jay Carney said.