Russia is reported to have reached an agreement in principle with western bank creditors on settling debts incurred when Moscow failed to pay interest on government bonds in August.

Foreign investors were left holding nearly one third of forty-billion roubles' worth of the bonds.

The banks are reported to have accepted that they will be paid in roubles, which are now worth much less in terms of dollars because of the currency's sharp fall in value.

More talks are due to resume in about ten days.