Volvo said that it had paused a joint project with Russia to build an armoured infantry fighting vehicle, citing concerns about the Ukraine crisis, reports The Local.

Renault Trucks Defense, which is owned by the Swedish truck manufacturer, in February 2013 signed an agreement to develop a combat vehicle with Russia's state-owned Uralvagonzavod.

But the project has been reconsidered due to concerns the Swedish government would veto the deal as the West seeks to isolate Moscow over its annexation of Crimea.

The vehicle, named Atom, would use a Volvo motor and so would require approval from Stockholm.

"As we see many uncertain factors around a possible collaboration, we have suspended our cooperation agreement until further notice," Volvo spokesperson Karin Wik told AFP.

The agreement was meant to last until March 2015, she added.

Sweden is not part of NATO, whose members have yet to block weapons sales to Moscow over its intervention in Ukraine but have suspended military cooperation.