LONDON, March 5 Russian shares fell again and the rouble slipped towards record lows on Wednesday as investors remained wary about a standoff between Russia and Ukraine in Crimea.
Chinese shares fell as fears grew over a possible default by a listed company there and on Beijing's plan to introduce deposit insurance - a move towards freeing up deposit rates - but the broader benchmark emerging equity index held up.
Ukraine's hryvnia dropped against the dollar while sovereign dollar bonds stabilised before talks between U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov in Paris.
Russian forces remain in control of strategically important Crimea in the Black Sea peninsula.
"Investors are still nervous and still on the back foot. Putin has left all his options open," Thu Lan Nguyen, emerging market strategist at Commerzbank in Frankfurt, said.
"Anything can happen. Investors are worried about an economic impact if the West were to decide on economic sanctions," he said, referring to French Foreign Minister Laurent Fabius' warning about possible EU sanctions on Russia.
The rouble-denominated MICEX index was down 1.5 percent while the dollar-denominated RTS lost 1.6 percent. Both indexes plunged as much as 12 percent on Monday, before recovering somewhat on Tuesday.
The rouble was down about 0.2 percent versus the dollar and the euro , having fallen to record euro lows on Monday.
The central bank said it had spent the equivalent of $11.4 billion - more than 2 percent of its foreign currency reserves - on Monday supporting the rouble.
Russia has relatively little foreign debt but the balance of payments position is deteriorating because of capital outflows and falling oil revenues.
The hryvnia was trading at 9.15 per dollar, having fallen as low as 11.7 on Monday.
Chinese shares fell 0.9 percent while the yuan slipped 0.25 percent against the dollar, having suffered its biggest weekly drop since 1994 last week.
In what would be the country's first domestic bond default, loss-making Chinese solar equipment producer Chaori Solar said it will not be able to meet interest payments on bonds due on Friday.
The decline in shares follows the yuan's dramatic weakening last week after the central bank let it fall beyond the official midpoint rate.
Many thought the move was designed to set the stage for further foreign exchange reforms as China began its annual parliamentary meeting on Wednesday.
Premier Li Keqiang said Beijing aims to grow the world's second-largest economy this year by 7.5 percent, the same target as set for 2013.
"There's a lot of uncertainty over politics there. The goal is to liberalise the FX regime and financial markets but the problem is there's not a lot of transparency," Nguyen said.
"A lot of people expect the yuan to appreciate but it is not a one-way street."
The MSCI emerging index rose 0.3 percent, supported by buoyant South East Asian shares.
Qatar's share index fell 2.3 percent after Saudi Arabia, the United Arab Emirates and Bahrain said they were withdrawing their ambassadors from Qatar because Doha had not implemented an agreement among Gulf Arab countries not to interfere in each others' internal affairs.
The index is on track for the biggest one-day fall since March 2011.
Zambia's kwacha currency fell as low as 5.93 per dollar as China's economic slowdown weighs on demand for copper. Zambia is a major exporter of the metal.
The kwacha has lost more than 6 percent of its value this year.
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