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Cash talks? Yulia Tymoshenko and Vladimir Putin are set to meet next month

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Moscow 'may lend Kiev $2bn'

Russia could lend Ukraine $2 billion to support the former Soviet republic's economy ahead of next year's election, according to local media reports.

Moscow-based business daily Vedomosti, citing an unidentified Russian government official, said gas supplies and the possibility of lending money to Ukraine would be discussed at an October meeting between Russian Prime Minister Vladimir Putin and his Ukrainian counterpart Yulia Tymoshenko.

The paper said Ukraine had not yet officially asked for a loan but said that Russian officials would be ready to look at the possibility of extending credit to Kiev.

"We do not need the collapse of Ukraine," the newspaper quoted the unidentified Russian government official as saying. "That would be oil on the fire of the election campaign."

When asked about the report, Putin's spokesman, Dmitry Peskov, told Reuters he was unaware of any talks about a possible loan.

Russian gas giant Gazprom supplies a quarter of the European Union's gas, most of which goes through pipelines across Ukraine.

Putin agreed earlier this month to let Kiev import much less gas than previously arranged, saving Ukraine's economy from potentially huge fines.

Diplomats say they are closely watching the relationship between Putin and Tymoshenko, the most popular Ukrainian politician now holding office, ahead of Ukraine's presidential election on 17 January.

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