Britain has reached an agreement over the rising cost of providing Saudi Arabia with Typhoon Eurofighter jets, British defence company BAE Systems said on Wednesday.

BAE, working in close co-operation with the British government, signed a £4.5-billion deal in 2007 to supply 72 Eurofighter Typhoon jets to Saudi Arabia. Even though some planes have been delivered, the contract has faced obstacles over rising costs.

"Both governments have now agreed price escalation terms relating to the Typhoon aircraft under the Salam programme," BAE said in a statement.

BAE, which did not give any precise figures, added that cash settlement was expected to follow the new pricing agreement.

"This is an equitable outcome for all parties," said BAE Systems chief executive Ian King.

"I am pleased that we have been able to conclude this negotiation which builds on our long standing relationship with this much valued customer."

Shares in BAE were trading 1.78-percent higher at 445.4 pence after the announcement, while London's benchmark FTSE 100 index was down 0.11 percent to 6,789.18 points.

The announcement is a boost for BAE after the United Arab Emirates pulled out of talks with the British government to purchase Typhoon Eurofighters last December.

BAE, hit by government cutbacks to military spending, is looking to push on after the collapse in late 2012 of a planned mega-merger with European aerospace giant EADS, before it was renamed Airbus Group.

BAE builds the Typhoons in co-operation with Airbus Group and Italian defence group Finmeccanica.

AFP