BRUSSELS. The EU and Ukraine have signed an agreement forging closer economic ties, in a show of support following Russia’s annexation of Crimea.

Former Ukrainian President Viktor Yanukovych’s abandonment of the EU deal in November triggered protests, his removal and Russia’s move into Crimea.

EU leaders have also agreed to try to reduce energy dependence on Russia.

In Moscow, President Vladimir Putin signed a law formally absorbing Crimea into Russia.

The EU and the US have announced sanctions on several high-ranking Russian figures, targeting Putin’s inner circle.

Russian shares fell sharply on Friday as investors considered the impact of the Western sanctions on Russia’s economy.

‘Rule of law’

The EU Association Agreement with Ukraine is designed to give the country’s interim leadership under PM Arseniy Yatsenyuk economic and political support.

EU President Herman Van Rompuy said in a statement that the accord "recognises the aspirations of the people of Ukraine to live in a country governed by values, by democracy and the rule of law”.

The political parts of the accord were signed in Brussels on Friday; the economic and trade sections will not be signed until after Ukrainian presidential elections in May.

Yatsenyuk said this was a "historic day”, adding: "We want to be a part of the big European family and this is the first tremendous step in order to achieve for Ukraine its ultimate goal, as a full-fledged member.”

He added that "the best way to contain Russia is to impose real economic leverage”.

Speaking at the end of the summit in Brussels, German Chancellor Angela Merkel said she was returning home "very happy,” as European leaders had been able to find a joint position on the Ukraine crisis.

UK Prime Minister David Cameron said that the best rebuke to Russia would be a strong and successful Ukraine.

Cameron described Sunday’s referendum in Crimea as a "sham”, saying it took place "at the barrel of a Kalashnikov”.

Trade issues 

The most sensitive issue of trade integration with the EU is as yet unsigned.

But in its Conclusions on Ukraine, published on Friday, the EU said it was committed to signing the remainder.

The EU also said it would push ahead with similar co-operation deals with two former Soviet republics - Georgia and Moldova - in the summer.

Moscow has troops in breakaway parts of Georgia and in Trans-Dniester, which broke away from Moldova, and our correspondent says the EU’s announcement on this is likely to infuriate the Kremlin far more than any sanctions imposed so far.