RPT-UPDATE 1-Russian stocks bounce after Ukraine deal

Fri Apr 18, 2014 3:21am EDT

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MOSCOW, April 18 (Reuters) - Russian shares surged on Friday after a deal struck by Russia, Ukraine, the United States and the European Union boosted hopes of a peaceful resolution to the crisis in Ukraine.

At 0700 GMT the dollar-denominated RTS index was up 2.8 percent at 1,206 points while the rouble-denominated MICEX rose 2.3 percent to 1,360 points.

The gains were broad-based, with gas giant Gazprom up 2.9 percent, Sberbank 2 percent, oil major Lukoil 1.9 percent, and telco MTS 3.2 percent.

Russian stocks slid at the beginning of the week after an armed uprising by pro-Russian rebels in eastern Ukraine and the start of a military crackdown by Kiev.

However, Thursday's deal in Geneva outlines steps that are designed to reduce tensions, including disarmament of illegal groups and a national dialogue on constitutional reforms.

The agreement, which came after Thursday's market close, means that the West is likely to hold off for now from tougher economic sanctions against Russia, the major fear of investors in Russian assets.

"Investors must be comforted by the results of the four-way negotiations in Geneva on the Ukraine crisis," Rossiysky Kapital analyst Anastasia Sosnova said in a morning note.

The rouble reacted to the deal late on Thursday, gaining 1.4 percent against the dollar to reach a 10-day high, also boosted by demand for roubles to pay end-of-month taxes.

On Friday the rouble pared those gains, with forex market activity set to be limited by the Good Friday holiday in Western countries.

The Russian currency was 0.2 percent weaker at 35.54 against the dollar and 0.1 percent weaker at 49.14 against the euro.

It shed 0.2 percent to 41.64 against the dollar-euro basket. (Reporting by Jason Bush; Editing by Louise Ireland)

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