Ukraine assembly rejects premier's resignation, backs laws

KIEV (Reuters) - Ukrainian parliament rejected Prime Minister Arseny Yatseniuk's resignation on Thursday after approving legislation he said was needed to boost spending on the army and avoid a default.

Yatseniuk had tendered his resignation last week after lawmakers failed to support his proposed budget amendments at the first attempt. On Thursday, he was applauded by the deputies after they backed the amendments in a new vote and then voted overwhelmingly to block his resignation.

"We have approved in full a law amending the 2014 state budget law," parliamentary speaker Oleksander Turchinov said.

Yatseniuk had requested changes to the budget to offset lower-than-expected revenues and raise overall spending, including allowing an additional 9.1 billion hryvnia (449 million pounds) to be spent on Kiev's military campaign against pro-Russia separatists in the east of the country.

Yatseniuk said the former Soviet republic would have defaulted if the amendments had not been passed, and would have undermined a $17-billion bailout deal with the International Monetary Fund.

Ukraine's economic decline has accelerated despite the international assistance, with the fighting in the industrial east taking its toll.

(Reporting by Pavel Polityuk and Natalia Zinets, writing by Gabriela Baczynska, Editing by Timothy Heritage)