The World Trade Organisation (WTO) has given Brazil permission to impose $247.8m (£155m) in sanctions against Canada over government subsidies to its aircraft industry.

Brazil had asked for $3.36bn in punitive tariffs.

The WTO found that the Canadian government made loans below market rates to US airlines to help regional aircraft maker Bombardier win contracts.

Bombardier and Brazil's Embraer are rivals in the short-haul jet market.

Brazil asked for a ruling on countermeasures after Canada ignored a WTO recommendation to withdraw the subsidies by May last year.

Counter attack

The WTO arbitration panel rejected Brazil's multi-billion dollar claim on the grounds that it had reached the figure using "assumptions that were not sustainable".

Canada had argued that only $33.5m in tariffs should be allowed.

In December, Canada revealed that the WTO planned to allow Brazil to impose the tariffs but that it was unlikely to apply them because of the "damage this would cause to bilateral trade".

Canada already has WTO permission to impose $1.4bn of sanctions against Brazil from an earlier trade dispute but has never activated them.