Ukraine president Viktor Yanukovych "intends to sign" the far-reaching trade and co-operation agreement with the European Union that he rejected only last month, EU foreign policy chief Baroness Ashton said today.

Lady Ashton said that, after talks with Mr Yanukovych in Kiev, it was clear that the short-term economic and financial issues Ukraine faces can be alleviated by signing the association agreement, which will bring in fresh investment from EU nations.

She said: "Yanukovych made it clear to me that he intends to sign the association agreement."

Signing would be an about-face for Mr Yanukovych since his rejection of the deal last month made it clear he sought closer links with Russia instead.

Mass protests in Kiev since have been calling for closer links with the EU.

EU and other Western diplomats have increased their pressure on Mr Yanukovych to seek a solution to the tensions that have paralysed the economically-troubled nation of 46 million.

Mr Yanukovych has maintained that a deal with the EU could still be worked out if Kiev was offered better conditions.

Lady Ashton said Ukraine's economic problems "can be addressed by the support that not only comes from the EU institutions, but actually by showing that he has a serious economic plan in signing the association agreement".

The signature on the EU association agreement "will help to bring in the kind of investment that he needs", she said.

Ukrainians in the east look more favourably on closer ties with their giant neighbour, and Russia has worked hard to derail the accord.

Mr Yanukovych, who is seeking a bailout loan from the International Monetary Fund to keep Ukraine from going bankrupt, is sensitive to the economic disruption that trade disputes with Russia can cause.