HIGHLIGHTS-Vladimir Putin's annual question and answer session

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MOSCOW, June 20 (Reuters) - Following are highlights of Russian President Vladimir Putin's annual question and answer session which was broadcast live on state television on Thursday.

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ON DUTCH ALLEGATIONS RUSSIA WAS LINKED TO 2014 DOWNING OF MH17 PASSENGER PLANE OVER UKRAINE

"Russia has never evaded responsibility when responsibility lay on its shoulders. What was presented as proof of Russia's responsibility does not satisfy us at all. There is no proof there. Eveyrthing that was presented does not say anything. We have our own version, we have presented it. But unless we have normal dialogue, we won't find the right answer to the questions that remain unanswered."

ON POSSIBLE U.S. MILITARY ACTION AGAINST IRAN

"This would be a catastrophe for the region, at the very least. Because this would lead to a surge in violence and, maybe, an increase in the number of refugees from the region. For those who would make such attempts, it could also have gloomy consequences, because it's very difficult to work out in advance what may follow the use of military force."

"We would not want this scenario to unfold."

ON ALLEGED CYBER ATTACKS AGAINST RUSSIAN INFRASTRUCTURE

"First of all we more than once offered our American partners to start a dialogue to come up with cyber space regulations, including those that have impact on strategic infrastructure and the media. But we haven't received any cohesive response yet.

ON TIES WITH WASHINGTON

"Dialogue is always good and needed. If the American side shows interest, of course we are ready for such dialogue. We see what is happening in U.S. domestic politics. There are many restrictions from different institutions, so I think it won't be that easy... We have things to discuss, both in the field of international security and the economy, among other things."

ON CAPTURED UKRAINIAN SAILORS

"The release of the Ukrainian sailors who were detained as part of an incident near the Kerch Strait.... issues like this should not be resolved in isolation. Before resolving these issues, we should think about how to resolve the fate of people we are concerned about, including Russian citizens who are in a similar situation in Ukraine."

ON SANCTIONS

"We are accused of occupying Donbass (in Ukraine) - That's complete nonsense and lies. But China has nothing to do with it (Ukraine). (U.S.) tariffs on its goods are essentially sanctions as well. They are growing and growing."

"As for sanctions, my point of view is that it's a big mistake from the American side. I hope that one day the realisation will come and that this will be fixed."

ON U.S. RESTRICTIONS ON HUAWEI

"An attack on Huawei. Where did it come from? And what is the point of it? The only point is to hold back China's development, which has become a global competitor for another global power - the United States. The same thing is happening in respect of Russia and will be happening going forward."

ON RUSSIANS' REAL DISPOSABLE INCOMES

"It's true that real incomes have been falling for several years. The biggest fall was in 2016, but now incomes have gradually started to recover."

ON CONSUMER LENDING

"One of the significant elements of (household) expenses today are loan repayments. Banks today give out loans that are secured against 40 percent of wages, which is risky. In my opinion, the central bank should pay attention to this, because we don't want to create these bubbles in the economy."

ON RUSSIA'S NEW INTERNET LAW

"This has nothing to do with restrictions on the Internet. We have already spoken about Chinese firm Huawei. The United States took a decision and restricted its operations. Most servers are abroad. I hope it won't come to this (the U.S. switching off servers to hurt Russia), that they won't go that far because it would destroy their own system... but in theory, if these servers were switched off and their operations compromised, then we have to ensure that the "Runet," the Russian segment of the Internet, functions in a reliable way." (Reporting by Moscow bureau)