A Ukrainian judge on Tuesday sentenced former prime minister Yulia Tymoshenko to seven years in jail for abusing her powers in a 2009 gas deal with Russia, a verdict that is set to harm ties with the European Union.

Amid emotional scenes in the packed court, judge Rodion Kireyev said the 10 year contract for gas imports from Russia had sustained heavy losses for Ukraine and ruled that her actions were criminal.

"The court rules that Y.V. Tymoshenko intentionally used her powers to criminal ends," Kireyev said in his judgement. "The court finds her guilty and sentences her to seven years in prison."

EU officials have warned that a conviction would severely jeopardise Ukraine's hopes of signing an association agreement with the European Union this year, which would be a first step towards its goal of joining the bloc.

The former Orange Revolution leader, flanked by her husband Olexander and daughter Yevgenia, immediately denounced what she said was a verdict ordered by her arch enemy Viktor Yanukovych.

The verdict was in line with the demand of prosecutors, who wanted a sentence of seven years.

"We will fight and defend my good name in the European court," Tymoshenko said. "We have to be strong and defend Ukraine from this authoritarianism."

Kireyev said Tymoshenko sustained a loss to state gas firm Naftogaz of 1.5 billion hryvnia ($190 million) by agreeing the 10 year contract.

"Y.V. Tymoshenko... used her official powers to criminal ends and, acting consciously, committed actions which clearly exceeded her rights and powers which had heavy consequences," Kireyev said.

He also ruled that Tymoshenko would herself have to pay back the losses sustained.

Despite being in custody since August, Tymoshenko as ever showed up in court with her hair plaited intricately around her head and wearing an immaculate beige dress.

She shouted "Glory to Ukraine!" after being led in.

Her supporters have portrayed the trial as a struggle for the future of Ukraine and a historic fight to ensure it has a future at the heart of Europe.

Tymoshenko insists that the case is a vendetta pursued by Yanukovych to eliminate her from politics after their tight tussle in 2010 presidential elections.

Hundreds of Tymoshenko supporters gathered outside the court in central Kiev in a tense standoff with security forces as the verdict was read out.

Similar numbers of elite Berkut anti-riot police kept watch over the protestors and there were minor scuffles although no major clashes.

"Freedom for Yulia!" and "Down with the bandits!" were among the slogans shouted by the demonstrators who also put up tents outside the court in a sign they had no intention of moving away in a hurry.

EU foreign policy chief Catherine Ashton warned earlier this week that the process could affect the integration of Ukraine, saying that "we're not optimistic about this trial".

Swedish Foreign Minister Carl Bildt was blunter: "Political show-trials have no place in our Europe," he said.

Since coming to power, Yanukovych had sought to confound critics who portrayed him as a pro-Kremlin relic from the USSR by setting EU integration as his main aim and snubbing an offer to join a customs union with Russia.

Tymoshenko was first detained in August for contempt of court after she incessantly mocked the boyish Kireyev on Twitter messages sent from her iPad in the courthouse and has been in custody ever since.