ST. PETERSBURG, Russia - Russia signed a contract Friday worth more than $1 billion to buy two French warships _ the largest military deal between a NATO country and Moscow.

Russian President Dmitry Medvedev oversaw the signing ceremony in the country's second-largest city, St. Petersburg.

The sale of Mistral-class assault warships took months to negotiate. Under a preliminary agreement in December, the first two such ships will be built by the French company DCNS and two others will be constructed jointly by French and Russian shipbuilders.

The U.S. has expressed concerns that a sale would send the wrong message to American allies in central and eastern Europe, Russian neighbors who are alarmed by the plan.

French Trade Minister Pierre Lellouche told reporters the deal was worth euro1.12 billion ($1.6 billion), but Anatoly Isaikin, chief of the Russian state arms exporter Rosoboronexport, put it at $1.2 billion ( euro850 million). The discrepancy couldn't be immediately explained.

The talks on the deal have dragged on for months amid disputes about how many ships would be built and where, and how much sensitive technology France would share.

Roman Trotsenko, spokesman for Russia's state-controlled United Shipbuilding Corporation, told Russian Rossiya 24 television that Russian industries will produce about 40 percent of the components for the first two ships.

Trotsenko said France also has agreed to provide Russia with the proprietary state-of-the art command and control system for the ships, which are more advanced than the technology the Russian navy has.

"The French side has agreed to an unprecedented level of cooperation in the technology transfer," he said.

The Mistral, which could carry as many as 16 helicopters and dozens of armored vehicles, would allow Russia to land hundreds of troops quickly on foreign soil.

The prospect has alarmed human rights activists and Georgia, which fought a brief war against Russia in 2008, as well as the ex-Soviet Baltic nations in NATO who are worried about Russia's increasing sway over its neighbors.