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 Catherine Ashton said today.

Ms 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.

Anti-government protesters meanwhile were claiming victory today after riot police backed down from a showdown in Kiev’s main square.

Squadrons of officers in helmets and carrying shields converged at about 1am on Independence Square, but thousands of protesters put up fierce resistance for hours, shoving back at police lines to keep them away from key sites.

The Ukrainian chief of police then announced that there would be no attempt to break up the demonstrations.

Protesters have been gathering around the clock to demand the resignation of the government in a crisis that threatens the leadership of Mr Yanukovych. “I want to calm everyone down — there will be no dispersal,” interior minister Vitaly Zakharchenko said. “No one is encroaching on the rights of citizens to peaceful protest.” Police buses that had been parked outside the building all night drove away to the protesters’ shouts of “Shame!”

Another group of police that had been stationed outside Kiev city hall, which has been occupied by protesters for weeks, also departed. Several thousand protesters who remained on the square after dawn cheered as police drove away. “This is a great victory,” Arseny Yatsenyuk, a top opposition leader, shouted from the stage.

Throughout the stand off the police appeared to be under orders to refrain from using excessive force, unlike the violent beatings of protesters in recent weeks.

Several demonstrators and police were injured, but the policeman helped injured activists up from the ground and moved them away. The protests began in late November when Mr Yanukovych backed away from a pact that would deepen the former Soviet republic’s economic ties with the 28-nation European Union — a pact that surveys showed was supported by nearly half the country’s people.

Demonstrators who gathered during the night waved EU and Ukrainian flags and sang the national anthem. Many of the protesters, wearing orange hard hats to protect themselves from police truncheons, locked arms and simultaneously jumped up and down to stay warm in freezing temperatures that plunged to minus 11C.

Scuffles broke out between police and opposition politicians, one of whom lay down on the snow trying to block a vehicle from advancing on the camp.

An Orthodox priest sang prayers, and a popular Ukrainian rock song with the lyrics “I will not give up without a fight” blared from loudspeakers over the square. Pop singer Ruslana kept up morale by singing the national anthem and cheering protesters from the stage. After some of the barricades and tents were dismantled, police and city workers began to remove debris with bulldozers. Policemen used what appeared to be chain saws to clear the barricades. But as dawn arrived the police had not been able to drive back the protesters on the square or to storm the city administration building, where demonstrators poured the building steps with ice to make seizing it more difficult. The confrontation unfolded as EU foreign policy chief Catherine Ashton and US assistant secretary of state Victoria Nuland were in the city to try to talk to the government and the opposition to work out a solution. The protests are the biggest since

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