UPDATE 2-Putin urges oil cash be used to help Russian banks

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By Gleb Bryanski

MOSCOW, March 3 (Reuters) - Russian President Vladimir Putin said on Monday the country could use part of its $484 billion gold and forex reserves to help steer the banking system and economy through turbulence from world markets.

Putin, who says he will work as prime minister under next president Dmitry Medvedev after stepping down in May, told ministers to work out ways to help banks cope with choppy world markets and suggested reserves could be used.

"We need to create a set of tools for the long-term funding of the banking sector," Putin was quoted by Russian agencies as telling his ministers at the first cabinet meeting since the March 2 election, which his trusted ally, Medvedev, won.

"I ask you to prepare proposals on the optimisation of the management of the country's financial reserves taking into account what is happening in the world economy," Putin said.

Putin said he meant Russia's giant gold and forex reserves, which include the $128 billion Reserve Fund and $32 billion growth-oriented National Wealth Fund (NWF), where Russia collects its revenues from booming oil exports.

The comments place Putin firmly with the powerful banking lobby in debates over how to use Russia's giant oil wealth, which could become the focus of a tussle between fiscal conservatives and advocates of higher domestic spending.

Echoing Medvedev's keynote pre-election speech in Siberia last month, Putin's remarks contradicted statements by Finance Minister Alexei Kudrin, who wants to invest the oil wealth strictly outside Russia. Putin did not elaborate.