Montenegro signed an accord with the European Union on October 15 that puts the Adriatic republic on the its way to eventual membership of the European Union, Reuters news agency said.

Montenegro's prime minister Zeljko Sturanovic signed the Stabilisation and Association Agreement (SAA) with EU foreign ministers in Luxembourg after overcoming Bulgaria's objections against the spelling of the word euro in the text.

Sofia had threatened to delay the signature in its battle for the right to use the Bulgarian name "evro" for the currency in its Cyrillic alphabet, but it allowed the signing to go ahead after EU envoys pledged in a declaration to address the problem, Reuters said.

"Montenegro is closer to Europe today," Sturanovic said, adding that it hoped to launch an official application for EU membership in the first half of 2008.