UPDATE 2-Russian assets climb after Putin orders military back from Ukraine border

Mon May 19, 2014 5:39am EDT

Related Topics

* MICEX above 1,400 points first times since March 3

* Rouble at its strongest since early February (Adds latest prices)

By Lidia Kelly

MOSCOW, May 19 (Reuters) - Russian assets added to their gains on Monday after President Vladimir Putin ordered troops to return to their bases after holding drills near the Ukraine border.

At 0905 GMT, the rouble-denominated MICEX index was up 1.2 percent to 1,408.4 points on the news, after trading around 0.7 percent higher earlier in the session.

Putin's office said he had issued the order because the spring manoeuvres were over. The move could also be intended to ease tension in Russia's standoff with the West over Ukraine before Kiev holds a presidential election on Sunday.

A NATO officer in Brussels said there had been no sign of the troops returning to their bases, however.

MICEX is trading above 1,400 points for the first time since March 3, when Moscow stocks plummeted after parliament rubberstamped Putin's right to intervene militarily in Ukraine.

The dollar-denominated RTS index was up 1.6 percent on the day to 1,281.9 points, double the daily gains seen earlier in the session.

The rouble firmed 0.5 percent against the dollar and the euro, trading at 34.58 and 47.40, respectively, its strongest since early February.

That left the rouble 0.5 percent stronger at 40.41 against the dollar-euro basket that the central bank uses to guide the rouble's nominal exchange rate.

Investors in Russian assets are also awaiting Putin's visit to China on Tuesday and Wednesday. They are keen to see whether the two sides sign a long-term contract for Russia to supply gas.

"The confrontation between Russia and the West because of the Ukrainian crisis has significantly increased the risks of investing in Russian securities and the signing of the contract with China would give a push for Gazprom shares and may also serve as an impetus for the growth in other stocks," Anastasia Sosnova, an analyst at Rossiyski Capital, wrote in a note.

Also in the spotlight this week will be Russia's annual economic forum in the northern city of St. Petersburg, a traditional showcase for investment opportunities in Russia.

But many Western chief executives have declined to attend, giving in to pressure from the United States to distance themselves from Russia over Moscow's annexation of Crimea and its continued involvement in Ukraine's affairs.

For rouble poll data see

For Russian equities guide see

For Russian treasury bonds see

Russia in graphics: link.reuters.com/dun63s (Reporting by Lidia Kelly; Editing by Hugh Lawson)

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