MOSCOW, July 16 (RIA Novosti) - Russia and Germany will sign a credit agreement worth 500 million euros ($706 mln) to finance joint projects after talks between the countries' leaders on Thursday, a Kremlin aide said.

Russian President Dmitry Medvedev and German Chancellor Angela Merkel will meet in Munich on Thursday to discuss bilateral trade, economic cooperation, and energy security.

"A 500-million euro credit agreement is planned to be signed between the Vnesheconombank state-run corporation and Germany's KfW Ipex-Bank," Sergei Prikhodko said. The funds will be spent on Russian-German projects, primarily in mechanical engineering.

German engineering giant Siemens AG and rail monopoly Russian Railways (RZD) are set to sign an agreement to establish a joint venture for the production of new generation locomotives.

The parties are also expected to sign a memorandum of understanding to modernize Pulkovo airport in Russia's second city of St. Petersburg.

According to Prikhodko, Medvedev will urge German authorities to support the purchase of the ailing German car giant Opel by an international consortium of Austrian-Canadian auto supplies company Magna and Russia's largest bank, Sberbank.

"We will call on them to support the deal. We will also voice our support for it," the aide said.

The German government, Magna International and Sberbank, reached an agreement on May 30 for the consortium to take over Opel, part of U.S. car giant General Motors. Russian truck maker GAZ, owned by billionaire Oleg Deripaska is acting as industrial partner.