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Russia said on Wednesday it had reached a deal with Ukraine over a large gas debt after threatening to reduce supplies, but Kiev denied that it owed as much as the $1.3 billion cited by Moscow.

Analysts said the spat, which revived European fears over stability of gas flows, was politically motivated. Moscow issued the threat as votes were being counted from a parliamentary election in Ukraine that showed gains for pro-Western parties.

"We have reached an agreement to avoid such problems in the future," Dmitry Medvedev, Russian First Deputy Prime Minister and chairman of gas export monopoly Gazprom, said after meeting Ukraine Energy Minister Yuri Boiko.

Gazprom said Boiko had pledged to repay the debt before November to avoid a reduction in supply and to guarantee stable deliveries to Europe.

"European consumers won't suffer. European customers are in an absolutely comfortable situation," Medvedev was quoted by Russian agencies as saying. Gazprom's stock fell by 0.7 percent, in line with the broader market.


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