Russian gas giant Gazprom rejected a reported Ukrainian proposal on Friday of a 10-day freeze on price pending talks to resolve the heated dispute over gas supply amid increasing fears that the company would follow through on its threat to shut down gas supply on New Year's Day.

The Ukrainian presidential press service said Friday President Viktor Yushchenko had sent a telegram to his Russian counterpart Vladimir Putin proposing to freeze gas prices for 10 days to allow Gazprom and Ukrainian national oil and gas company Naftogaz Ukrayiny to work out a contract for gas supply for 2006.

The Kremlin, however, denied receiving the telegram from Yushchenko.

And Gazprom rejected the reported proposal.

"There exists a danger that, having proposed a freeze on the price for 10 days, the Ukrainian side will want another 10 days," Gazprom spokesman Sergei Kupriyanov was quoted by the Interfax news agency as saying.

Kupriyanov said company chairman Alexei Miller reiterated Gazprom's position on Friday and it remained unchanged.

Ukraine is buying Russian gas for 50 U.S. dollars per 1,000 cubic meters, but Gazprom has asked Ukraine to pay more than quadruple this price and offered cash payments for the transit of its gas to European clients.

Ukraine said it is willing to switch to market prices for gas but insisted on a transitional period to adjust its economy.

Following a second day of talks between the two countries' energy ministers, which failed to turn out any agreement, Putin offered a multibillion-dollar loan on Thursday to help Ukraine offset the impact of a steep price hike on its economy. Yushchenko turned down the offer.

"Ukraine does not need these credits. Ukraine will rely on its own resources under a clear, correctly and objectively formed price," Yushchenko said in a televised speech on Thursday.

Speaking on Russia's NTV television, Miller stepped up the pressure on Ukraine by threatening anew to shut down gas flow to Ukraine if no deal is reached by New Year's Day.

"If Ukraine does not sign a gas delivery contract with us before the beginning of 2006, all gas shipments from Russian territory to consumers in Ukraine will be stopped at 10:00 a.m. (0700 GMT) on Jan. 1," Miller said.

"Our steps will be clear and resolute," he said.

Although Miller said his company was working on a detailed plan to ensure gas supply to its European clients, the looming supply cut to Ukraine has raised European fears of a disruption of gas flow as 80 percent of Gazprom's Europe-bound gas is transited through a Ukrainian pipeline.

In Brussels, energy officials of the member states of the European Union (EU) are set to meet for an emergency session to discuss the gas supply situation of the 25-nation bloc.

"The (European) Commission is concerned, but remains confident that an agreement will be reached between the parties and that both Russia and Ukraine will honor their commitments to supply European gas markets as they have at all times in the past," the EU's executive arm said in a statement Friday.

The EU buys 25 percent of its gas supplies from Gazprom.