The Kremlin on Wednesday said it considered a dispute with France over the non-delivery of two Mistral warships 'completely settled' after Paris returned money it had paid in advance.

"The President of Russia and the President of France took a joint decision to annul the contract," the Kremlin said in a statement after a phone talk between the two leaders Vladimir Putin and Francois Hollande. "Moscow considers the Mistral issue to be completely settled."