President Fran?ois Hollande yesterday halted the shipment of a warship France is building for the Russian navy, in the clearest sign yet that European capitals are prepared to punish the Kremlin despite claims it is pursuing a Ukrainian ceasefire.

The decision to suspend the handover of the first of two Mistral vessels was announced in a terse Elysée statement, which said conditions for delivery had not been met. The announcement came on the eve of the Nato summit and follows criticism of the €1.2bn contract from the UK government and other members of the defence alliance.

French officials emphasised the deal had not been fully cancelled, an action which could result in as much as €1.1bn in fines for breach of contract. However, the decision follows months of resistance by Paris and signals how much further relations between Russia and the west have deteriorated since Moscow last month began deploying troops inside Ukraine to back separatist rebels.