By Alessandra Prentice and Lidia Kelly
KIEV/MOSCOW (Reuters) - Russia has agreed to allow Ukraine extra time to file its defence with a British court over a $3 billion debt to Russia, Moscow and Kiev officials said on Friday.
Russia filed a lawsuit against Ukraine in February at London's High Court demanding repayment of the $3 billion Eurobond, which matured on Dec. 20. Meanwhile Ukraine insists Russia must accept restructuring terms agreed with other foreign creditors.
Russia said on Monday it would not agree to Ukraine's request for more time to file a defense, but on Friday it reversed its position.
"Russia has belatedly conceded to the entirety of the additional time Ukraine has requested," Ukraine's finance ministry said in a statement.
"(It is) pleasing that Russia has eventually seen sense on this issue and avoided wasting the Court's time in dealing with an issue which Russia was destined to lose," it said.
Russian Finance Minister Anton Siluanov said that Moscow was giving the new Ukraine government a chance.
"We have given the new government of Ukraine extra time in order for Kiev to soberly assess the situation, revise previously stated positions and begin good faith negotiations with Russia," Siluanov said. [ID:nR4N17N00W]
A source familiar with the proceedings said the court order stated this extension was final and no further extensions would be granted.
The lawsuit has become yet another bone of contention between the one-time allies, whose relations are at an all-time low following Russia's annexation of Ukraine's Crimea peninsula and a costly pro-Russian separatist conflict in eastern Ukraine.
Originally, Ukraine had until March 19 to file its defence although it was granted an extension until April 16. It has since asked for the second extension until May 27.
The Eurobond in question was issued by the government of former president Viktor Yanukovich just two months before he fled to Russia in February 2014 amid bloody street protests. They were triggered by Yanukovich seeking to halt Ukraine's move towards European integration in favour of closer economic ties with Russia.
Ukraine refused to repay the bond, including it in the external debt it earmarked for restructuring as part of an International Monetary Fund-led bailout programme. Moscow insists the bond is sovereign debt and should not be part of the programme.
(Reporting by Alessandra Prentice and Lidia Kelly; Additional reporting by Karin Strohecker in London and Darya Korsunskaya in Moscow; Editing by Richard Balmforth)