MOSCOW - The Kremlin said on Wednesday that "everything is fine" in the Russian defence sector, responding to an assertion by the U.S. State Department that sanctions had cost Russia $3 billion in lost defence contracts.

"I can just say that everything is fine, everything is fine," Kremlin spokesman Dmitry Peskov said in a phone call with reporters on Wednesday.

Peskov said Russia was "trying to hedge risks related to instances of unfair competition on the part of the United States in the market of military-technical cooperation."

(Reporting by Max Rodionov; Writing by Polina Ivanova; Editing by Raissa Kasolowsky) ((p.ivanova@thomsonreuters.com;))