Ukraine and Russia agreed yesterday to set a three-year transition period towards market prices on gas that Kiev buys from Russia and on transit for gas pumped through Ukraine to Europe, write Roman Olearchyk in Kiev and Catherine Belton in Moscow .

A top Ukrainian official said Ukraine would pay between $250-$300 per 1,000 cubic metres next year, significantly lower than the $500 (€354, £281) rate Gazprom said it charges Europe.