MOSCOW -- Russia and Boeing Co. sealed a joint venture to supply titanium aircraft parts to the U.S. Friday, allaying fears that the Kremlin had planned some tit-for-tat punishment against the aircraft maker as a retaliation to U.S. sanctions last week.

President Vladimir Putin promised to support Boeing's future work in Russia while he praised the aircraft maker's joint venture with Russia's titanium monopoly, VSMPO-Avisma. The 50-50 joint venture will supply some $18 billion worth of parts for Boeing's next-generation passenger aircraft, the 787 Dreamliner, in the coming years.

"Today's event will allow us to achieve a new level of cooperation," Mr. Putin said in a meeting in the Kremlin with Boeing executives that was broadcast on state-controlled television. "We, for our part, will support the development of your business in Russia."

Relations between Washington and Moscow have sunken steadily in the past few months over differences in the Middle East and the state of democracy in Russia. Diplomats have been hoping Moscow and Washington can pave over their differences if they concentrate on matters of common interest, such as security and trade.

The sanctions announced by the State Department last week against the Russian state arms exporter, Rosoboronexport, and Russian state-owned warplane maker, Sukhoi, were a fresh disruption. The State Department said the companies had sold restricted items to Iran. Russia's Foreign Ministry called the sanctions an "illegitimate attempt" to make foreign companies work by American rules.

Analysts say the Kremlin could still retaliate against U.S. companies bidding for business in Russia, perhaps by cutting them out of the $20 billion Shtokman project to develop Arctic gas deposits.

Friday's titanium deal is important to Boeing, however, because the aircraft maker relies heavily on Russia for its raw materials. Boeing has also hoped that by working closely with Russian companies the state airline Aeroflot may turn to Boeing to update its aging fleet of passenger planes. Besides its joint venture with VSMPO-Avisma, Boeing is working with Sukhoi on a venture to design and manufacture a passenger jet for regional lines.

Boeing along with rival Airbus is using titanium and other light-weight metals to develop new airplanes that burn less fuel and fly farther. (Airbus is 80% owned by European Aeronautic Defence & Space Co., of France, and 20% owned by BAE Systems PLC of the United Kingdom.

The Russian titanium monopoly, VSMPO-Avisma, is the largest titanium producer in the world and supplies 35% to 40% of the metal used by Boeing. The Russian arms exporter, Rosoboronexport, is about to acquire VSMPO-Avisma as part of a broader move of the Kremlin to take over what it considers strategic industries.

Boeing said it has been working closely with U.S. government agencies to ensure the joint venture is compliant with U.S. law. The company said its key projects in Russia are not affected by the U.S. sanctions.

Analysts said the Kremlin was keen to see the joint venture with Boeing, because VSMPO-Avisma will take on a greater role in parts production, rather than simply supplying titanium to Boeing. Boeing said VSMPO-Avisma will perform rough machining of titanium forgings under the joint venture, and that final machining and processing will be completed by Boeing's Portland, Ore., fabrication facility and other machining subcontractors.

Ivan Safranchuk, head of the Moscow office of the Center for Defense Information, said the Kremlin was also interested in signing the deal to show its defiance of the U.S. sanctions.

"They wanted to show that people want to work in Russia regardless of what any government says about it," Mr. Safranchuk said.