By Ellie Tzortzi

BELGRADE, June 8 (Reuters) - Serbian Prime Minister Vojislav Kostunica pursued his diplomatic balancing act between East and West on Friday, travelling to Russia to thank President Vladimir Putin for blocking independence for breakaway Kosovo province.

He was due to meet Putin in St Petersburg on Saturday, a day after Russia tripped up the G8 summit in Germany by making it clear it would veto a United Nations resolution -- sponsored by the West -- to make Kosovo independent this year.

In comments to daily Vecernje Novosti, Kostunica said it was time for "new talks for an acceptable solution" on Kosovo.

"I will discuss these ideas with President Putin. Together we have to look for ideas that would lead us to a compromise."

Serbia rejects independence for Kosovo, cradle of its Orthodox faith but now home to a 90 percent Albanian majority that will take nothing less. It offers wide autonomy for the province instead.

Kosovo has been run by the United Nations since 1999, when NATO forced out Serb troops accused of killing thousands of civilians in a two-year war with separatists.

After a year of fruitless talks between Serbs and Albanians, U.N. envoy Martti Ahtisaari drafted a plan that would give the territory independence under European Union supervision, with wide self-government powers for the Serb minority.

Kosovo's Albanians agreed to the draft, but Serbia enlisted the help of Russia -- a fellow Orthodox nation and U.N. Security Council veto holder -- to block it.

While Kostunica's trip to Moscow underlines his gratitude to Russia, Serbia at the same time wants ties with the West and the European Union, which Belgrade wishes to join and which has invested capital and prestige in Kosovo.

Kostunica overcame his antipathy to the U.N. war crimes tribunal, which he sees as biased against Serbs, and arrested a long-time fugitive last week precisely in order to get Serbia's stalled association talks with the EU restarted.

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An EU diplomat who spoke to Reuters on condition of anonymity said the West was "baffled" by the Russian stance on Kosovo, which is not seen as vital to Moscow's interests.

Analysts say it has more to do with Moscow's flexing of its diplomatic muscle on the world stage, but some Serbs say Kremlin support will come with a price-tag.

A Russian delegation already visited Serbia last month looking for deals before the privatisations this year of Serbia's energy, utility and transport monopolies. One Serb leader said it was "special attention" for Serbia's main ally.

"Another issue we are going to discuss is economic cooperation," Kostunica said. "The government will do its best to attract Russian investments in energy, the banking sector, metallurgy and infrastructure."

One Western diplomat, commenting on a possible Russian bargain spree in Serbia, said it was a "strange way for them to show their EU vocation".

Kostunica's single-minded crusade for Kosovo, which he calls "Serbia's most important national issue", has been spiced with nationalist rhetoric, far from his original role in 2000 as the pro-Western democrat who ousted strongman Slobodan Milosevic.

If Serbia succeeds in having Russia block a U.N. resolution or delaying it further, Europe would have to pick up the pieces. Its Kosovo mission would be in a legal void, and Western peacekeepers could be targeted by frustrated Kosovo Albanians, in a territory awash with hidden weapons.

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