The painting will hang in St Petersburg's Hermitage Museum

A bitter Russo-German dispute over the ownership of a looted Rubens masterpiece has escalated dramatically after the Russian authorities ruled it should not be returned to Germany.

The painting, Peter Paul Rubens' Tarquin and Lucretia, was "appropriated" from Germany at the end of World War II by a Red Army soldier and is worth an estimated Ј50m.

Its owners have included Frederick the Great, Joseph Goebbels' lover, a Red Army soldier and finally, and most controversially, Moscow real estate tycoon Vladimir Logvinenko.

Russian Mafia

The German authorities desperately want it back but Russia's Prosecutor General's Office has ruled that Mr Logvinenko is the painting's rightful owner and that he did not break any Russian law in acquiring it.

He is thought to have bought it from another private collector for a fraction of what it was worth.

The painting was discussed by Russian President Putin (right) and German Chancellor Schroeder

Mr Logvinenko says he is furious that his ownership of the painting has been question.

He strenuously insists that he is a legitimate businessman and that he offered to give the canvas back to Germany last year in exchange "for reasonable compensation" but was rebuffed.

The painting now seems unlikely to return to Germany.

Instead it looks set to be fully restored by the Hermitage museum in St Petersburg and to then become part of the museum's permanent collection.

Humiliation

The canvas has been badly damaged over the years and is in urgent need of restoration.

"I don't want anything more to do with the Germans," Mr Logvinenko told Russian daily Izvestia.

"At least not until they offer me a full apology."

The Moscow businessman faces criminal charges in Germany over the matter and says he will go to the European court of human rights in Strasbourg in an attempt to quash them.

The ruling from the Russian Prosecutor's Office will do little to further Russo-German relations.

The painting's fate has been personally discussed by Russia's president Vladimir Putin and Germany's chancellor Gerhard Schroeder and the ruling is likely to be seen as a humiliating slap in the face for the German side.

Painted by the Flemish master between 1609 and 1612 it is considered to be one of Rubens' finest works.

It depicts the mythical rape of the chaste Roman housewife Lucretia by the the son of the last Roman King Tarquinius Superbus.