Xsl:strip-space and xsl:preserve-space (XSLT 2.0)

In my stylesheet, I am stripping all the spaces, new line character while
using <xsl:strip-space elements="*"/> which works perfectly as desired. 

But now I've come across the requirement where I need to preserve spaces
between the tags in few specific elements generally the punctuations(see
below example) I tried to use the <xsl:preserve-space> to sort out this
issue but doesn't seems to be working and "xsl:strip-space" seems to
overcoming the effect of "xsl:preserve-space" effects. Can we use both to
get their respective effects or simply they cannot be used together?

Below is how they looks in my stylesheet:

Snippet
=======

<xsl:stylesheet version="2.0"
xmlns:xsl="http://www.w3.org/1999/XSL/Transform"
xmlns:fo="http://www.w3.org/1999/XSL/Format"
xmlns:xs="http://www.w3.org/2001/XMLSchema"
xmlns:fn="http://www.w3.org/2005/xpath-functions">

<xsl:strip-space elements="*"/>

<xsl:preserve-space elements="element1 element2"/>

<xsl:output encoding="UTF-8" indent="no" media-type="text/xml"
method="xml"/>

--------------
--------------
--------------
--------------
--------------

</xsl:stylesheet>


Example:

<element1><surname>Dajnoki</surname>, <givenname>K.</givenname>
(<year>2002</year>) <article-title>XXXXX YYYY</article-title>.
<journal-title>ZZZZZZ XXXX</journal-title>
<first-page>43</first-page>&ndash;<last-page>46</last-page>.</element1>

Note: Spaces between the tags with any punctuation appears correctly (like
in <surname>Dajnoki</surname>, <givenname>K.</givenname>)  but fails in case
of a single space between tags > < (for instance in </journal-title>
<first-page> and results into the </journal-title><first-page> )


Below is how I have defined template for "element1"

<xsl:template match="element1">
    <xsl:apply-templates/>
</xsl:template>

Any suggestion would be an immense help.


Best,

Pankaj Chaturvedi

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