Ikea, the Swedish furniture giant, suffered embarrasment on a grand scale yesterday when the opening of its $300 million (€226 million) shopping centre outside Moscow had to be cancelled because of a dispute with local authorities.

Hundreds of guests, including the Swedish and German ambassadors, had gathered at the 230,000 sq metre Mega shopping centre in the town of Khimki.

Mr Hans-Goran Stennert, chairman of Ingka, the group that owns Ikea, said it was unclear why the local authorities had prevented the store from opening. "I think we have fallen victims of our own ethical standards in dealing with authorities," he said.

The local administration could not be reached for comment but the Swedish embassy in Moscow linked the development with the deterioration of the business climate in Russia. - (Financial Times Service)