The Ukrainian parliament voted down a bill that would have released Tymoshenko to leave Ukraine, a prerequisite for the agreement with the EU.
The move came only hours after Russian President Vladimir Putin welcomed Kiev’s aspiration to improve trade links with Moscow.
A spokesman for Putin said: “We welcome the desire to improve and develop trade and economic cooperation.”
At the beginning of the month, Standard & Poor’s suggested that an agreement with the EU was likely to provoke ire from Russia, with the possibility of punitive trade sanctions.
As recently as Wednesday, EU commissioner Stefan Fule said that there had been “considerable progress” towards the EU’s requirements for a deal, adding that he was encouraged by legislative developments.