US and European Union leaders yesterday agreed a settlement of their dispute over US sanctions laws against investors in Cuba, Iran and Libya. The EU said the deal, as well as lifting threatened sanctions against Total, the French oil group, immediately cleared the way for other European energy companies to invest in Iran and Libya.

The agreement was endorsed by the US president, Mr Bill Clinton, Mr Tony Blair, the British prime minister, and Mr Jacques Santer, European Commission president, at a summit in London. Mr Blair said the deal was "at least a basis for a lasting solution" to the two-year-old sanctions dispute and paved the way for closer US-EU trade and economic co-operation.

The intricate deal depends on Mr Clinton's persuading the US Congress to amend sanctions legislation.

Mr Clinton claimed yesterday that the deal underpinned Congress' objectives when it passed the sanctions legislation against Cuba, Iran and Libya.