(Corrects time reference in second paragraph)
MOSCOW Aug 28 Russian stock indexes and the
rouble fell sharply on Thursday, as reports of fresh Russian
military incursions into Ukraine dented hopes of a resolution to
the crisis and increased the risk of further western sanctions
At 0810 GMT, the dollar-denominated RTS index was
down 2.6 percent at 1,228 points, while its rouble-based peer
MICEX was 1.9 percent lower at 1,421 points.
"The war in eastern Ukraine has escalated, and the West is
calling for a new wave of pressure on Russia. This does not bode
well either for Russian or regional sentiment," analysts at
Uralsib Capital said in a morning note.
Kiev accused Moscow on Wednesday of further military
incursions in support of pro-Russian separatists in eastern
Ukraine, two days after revealing that it had captured 10
Russian paratroopers on its territory.
Russia denies military involvement in Ukraine and has said
the captured paratroopers probably crossed the border by
On Thursday, a Ukrainian fighter told Reuters the strategic
port of Novoazovsk had been occupied by regular Russian troops
disguised as rebel soldiers, a potentially significant
escalation that will fuel rumours of large-scale Russian
Russian state television reported East Ukrainian pro-Russian
separatist leader Alexander Zakharchenko as saying serving
Russian soldiers, on leave from their posts, were fighting
alongside the rebels.
The accusations follow Tuesday's presidential summit in
Minsk between Ukraine's Petro Poroshenko and Russia's Vladimir
Putin, which failed to lead to any diplomatic breakthroughs
despite discussion of a new ceasefire.
"We believe that financial markets have become excessively
optimistic in the glow of encouraging statements. The fighting
appears likely to continue," J.P. Morgan said in a research
J.P. Morgan recommended that investors move to underweight
positions in Russian and Ukrainian sovereign bonds, arguing that
further western sanctions have become more likely given the
allegations of Russian regular troops entering Ukraine.
The yield on Russia's 2023 treasury bond was at
9.36 percent on Thursday, up 5 basis points since Wednesday,
while the yield on its 2030 Eurobond had risen 14
basis points to 4.73 percent.
The rouble fell sharply, losing 0.77 percent against the
dollar to 36.45, 0.84 percent against the euro to
48.14, and 0.83 percent to 41.72 against its
Shares in Sberbank, Russia's top bank, fell 2.8
percent, extending early losses. It reported results that showed
a 2.3 percent fall in first half net profit and a 13 percent
rise in second quarter net profit, beating analysts' forecasts.
For rouble poll data see
For Russian equities guide see
For Russian treasury bonds see
Russia in graphics: link.reuters.com/dun63s
(Reporting By Jason Bush, editing by John Stonestreet)