Hungary and Brussels denied Friday that the EU has blocked Budapest's 12.5 billion euro ($13 billion) nuclear deal with Russia, saying that talks were still ongoing to resolve disputes over the plan.

The denial came after the Financial Times newspaper reported Friday that the bloc had vetoed the deal as its nuclear watchdog Euratom rejected Hungary's plans to import nuclear fuel exclusively from Russia.

Dismissing the report as "false and completely misleading," Hungarian government spokesman Zoltan Kovacs said: "Ongoing talks do not block the project."

"Our expectation is that, following intensive negotiations, the fuel supply contract will be finalised in line with Euratom requirements in a matter of weeks," added the spokesman.

The European Commission also said the dispute over fuel supply did not put the entire project into jeopardy.

"We are not blocking the construction of Paks, this is just the fuel supply agreement that has been dealt with by the Commission," EU spokeswoman Anna-Kaisa Itkonen said on Friday in Brussels.

The spokeswoman confirmed that the Hungarian authorities are in discussion with Euratom.

The planned 12.5 billion euro ($13.2 billion) expansion of Hungary's sole nuclear plant, which provides 40 percent of the electricity needs of the EU member, was to be financed largely with a Russian loan.

The expansion of the Paks nuclear power plant, 120 kilometres (75 miles) south of Budapest, was to be carried out by Russia's state nuclear corporation Rosatom, with construction of two 1,200 MW reactors set to begin in 2018.

The deal was seen as a sign of increasingly close ties between Budapest and the Kremlin under Prime Minister Viktor Orban, and has sparked concerns in the EU at a time when the bloc's relations with Russia were strained over Ukraine.

Rosatom spokesman Sergei Novikov meanwhile said: "The EU accepted the contract when it was signed, only the fuel delivery is blocked by Euratom, not the overall expansion."

"The conflict is between Hungary and the EU," he added.