* Rouble at 37.20 versus dollar
* Stocks fall on concerns of new sanctions against Moscow
* EU may bar Europeans from buying Russian sovereign bonds
(Adds latest prices, comment)
By Jason Bush and Lidia Kelly
MOSCOW, Sept 1 Russian assets fell on Monday,
with the rouble hitting a fresh record low against the dollar
after Europe and the United States accused Russia of direct
military involvement in Ukraine.
Fears of new sanctions, which could include a ban on buying
new Russian bonds, and weak economic data from China added to
At 1340 GMT, the rouble was 0.2 percent weaker against the
dollar at 37.19. It also lost 0.2 percent to
48.85 versus the euro and 0.2 percent to 42.44
against its dollar-euro basket.
Earlier in the day the rouble hit a new record low of 37.50
against the dollar, before rebounding in the afternoon.
"Geopolitical tensions this week are unlikely to allow the
rouble to stabilise," said in a note Alexei Yegorov, an analyst
at Promsvyazbank. "This means that the dollar may reach the
level of 38 roubles this week."
Russian stocks fell as the weakening rouble dragged down the
dollar-based RTS index. Data also showed that growth in
China's vast factory sector, a major importer of Russia's raw
materials, slackened in August.
The RTS was 0.6 percent down to 1,183 points, while its
rouble-based MICEX lost 0.3 percent to 1,396 points.
Moscow indexes and the rouble had plunged last week and bond
yields rose as the West accused Russia of deploying troops in
Ukraine, and threatened new sanctions.
Yields on Russia's Eurobonds rose by 30-50 basis points last
week, with the benchmark Eurobond maturing in 2030 trading at
5.03 percent on Monday, up from 4.59 percent in the middle of
last week. That is still significantly below the 12 percent
level seen in the aftermath of the 2008 global crisis.
Rouble treasury bonds also saw their yields rising, by about
30-50 basis points in recent days, chiefly reacting to the
weakening rouble. The yield on Russia's 2023 treasury was at
9.82 percent on Wednesday, up from 9.31 percent on Aug 27.
On Monday, sources said the European Union could bar
Europeans from buying new Russian government bonds under a
package of extra sanctions against Moscow.
There was no immediate reactions on the Russian bond market
to the news, as markets have broadly priced in another wave of
Overall trading activity on Russian markets on Monday was
subdued, due to a holiday in the United States.
Russia is also in a comfortable fiscal position, with budget
to see a small surplus this year thanks to the weaker rouble and
higher-than-expected oil prices.
There is also nearly half a trillion dollars worth of gold
and foreign exchange reserves that could be used to repair the
country's finances if a need arises.
The Finance Ministry has cancelled a number of its weekly
treasury bonds auctions, so-called OFZ bonds, this year because
of unfavourable market conditions. The share of foreign
investors in the OFZ market stood at 25 percent in July,
according to data from the central bank.
"For rouble bonds (the possible EU ban) is effectively
already all priced in, because in the last three months no
inflow of funds has been visible from non-residents in this
segment," said Alexander Baranov, deputy general director at
Pallada Asset Management in Moscow.
"What's more, the price of OFZs has plummeted and the yield
has risen as a result. Not long ago the longest bonds, expiring
in 2027, were trading at the same yield as in the first half of
2009 - the highest level for the last five years."
But a possible ban could damage Russia's creditworthiness
and have an impact on corporate borrowing as sovereign issues
serve as a benchmark for bonds issued by companies and banks.
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, Polina Devitt and Jason Bush;
Writing by Lidia Kelly Editing by Alison Williams)