MOSCOW - Russia's anti-monopoly agency said yesterday that the purchase of Yukos assets by a state-owned firm had been made in accordance with the law.a

Yukos' Yuganskneftegaz subsidiary - the oil giant's most important production unit - was sold at an auction last Sunday to an obscure company called BaikalFinansGroup for $9.3 billion, half of what foreign auditors say it was worth.

A state-owned firm, the Rosneft oil company, then purchased BaikalFinansGroup in an apparently secret deal. President Vladimir Putin's deputy chief of staff and longtime confidant, Igor Sechin, serves as Rosneft's chairman of the board.

Irina Kashunina, a spokeswoman for the Federal Anti-Monopoly Service, said the agency had reviewed the actions of both companies and had decided they conformed with current anti-monopoly legislation. "We had checked both companies prior to the deal," she said yesterday.

The deal sets the stage for the Kremlin's takeover of the nation's largest oil company following an 18-month official crackdown of Yukos, which supplies about 2 percent of the world's oil.

The U.S. State Department has said the sale further eroded investors' confidence in Russia's judicial and legal system; but Putin has strongly defended it, saying the state was merely protecting its interests through legal means, taking assets away from those who had bought them for a song during the controversial post-Soviet sellout of state property.

Yukos founder Mikhail Khodorkovsky has been in jail for the last 14 months on charges of fraud and tax evasion. Russian authorities say Yukos owes $28 billion in taxes, and have frozen its assets.

Putin defined the moves against Yukos as part of efforts to uproot corruption and shady accounting, but Kremlin critics have described it as a vendetta for Khodorkovsky's political activities and an attempt to gain leverage over the strategically important oil sector.

Arms sales

Russia, meanwhile, plans to sell a host of new military jet fighters and transport planes to China in 2005, arms export officials said Friday, adding that foreign sales of Russian weaponry and equipment could exceed $5 billion next year.

Yury Krylov, who heads the air force division of the Rosoboronexport state agency, said that his agency and Chinese Air Force expected to sign several new contracts for Su-30MK2 jet fighters. Work on supplying Il-76 military transports and Il-78 aerial tankers were almost finished as well, he said.

Defense analysts say Su-30s cost about $35 million each. India bought several dozen Su-30MKI jets in the late 1990s for $28 million each.

China is the Russian arms industry's No. 1 customer, and is expected to buy weapons worth some $2 billion this year to modernize its arsenal and support frequent threats to invade Taiwan.