The Soyuz rocket carrying the satellite was launched at 4:16 a.m. local time (2216 GMT Saturday) and placed the Giove-B into its projected orbit shortly after 0200 GMT, Jean-Yves Le Gall, president of Starstem, the Russo-European company in charge of the launch, said.

"The satellite separated" from the launcher which meant the launch "was a success," Le Gall said.

The satellite "reached its nominal orbit and the orbit's parameters were excellent," the navigation department chief of the European Space Agency (ESA) Didier Faivre said.

"The mission is a success," Franco Bonacina, spokesman for the ESA said.

Giove-B correctly deployed its solar panels, Faivre said.

The satellite, a 500-kilogram cube constructed by Astrium and Thales Alenia Space, is to take over from the first test satellite Giove-A, launched in December 2005.

Giove-B contains an atomic clock, the most precise on Earth but never before sent into space, which falls behind by less than a nanosecond a day.

The precision is particularly important for the localisation system, which is based on the calculation of time that passes between the emission and signal reception.

The long-delayed European project is meant to challenge the dominance of the US-built Global Positioning System (GPS), which is widely used in satellite navigation devices in vehicles and ships.

The two experimental satellites are to be followed, some time later, by some 30 satellites placed in permanent orbit at an altitude of 20,000 kilometres (12,400 miles).

The first four of 30 operational Galileo satellites are to go into space in the first quarter of 2010, using the Russian-developed Soyuz rocket.

Europe's Transport Commissioner Jacques Barrot, in an interview with French Sunday newspaper Le Journal du Dimanche, called Galileo "a tool of sovereignty for Europe."

He said: "We can no longer live in a world that is more and more dependent on global positioning while remaining reliant on one single American system. It is evident, Galileo is a tool of sovereignty for Europe."

The launch of Giove-B would allow Europe to keep access to a frequency reserved for Galileo with the International Telecommunications Union (UIT).

The European Parliament gave approval on Wednesday to the Galileo project, setting in stone the legal basis for the system, which has been plagued in the past by delays and infighting among EU nations.

The 3.4-billion euro (5.4-billion dollar) project would be divided into six segments -- satellites, launchers, computer programmes, ground stations, control stations and system operation.

Earlier, Barrot said the European Commission and the European Space Agency would launch public tenders by the middle of this year, with a view to first contracts being signed before 2009.

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