MOSCOW, July 10 Russia's rouble extended gains on Wednesday, buoyed by oil prices and central bank intervention, but the currency was seen as vulnerable to signs the U.S. Federal Reserve is moving closer to phasing out asset purchases.
Russian stocks edged lower, failing to benefit from a J.P. Morgan upgrade as investors awaited with caution minutes from the Federal Reserve's June meeting due later in the day.
The dollar-denominated RTS index was down 0.3 percent at 1,279 points, while its rouble-traded MICEX peer traded down 0.7 percent to 1,336 points.
J.P. Morgan raised Russia's stock market to neutral from underweight, expecting the index to outperform other emerging markets if oil prices return to the $110-$120 per barrel range.
"Higher oil in addition to helping oil stocks also reduces fiscal stress and supports the rouble," J.P. Morgan strategists said in a note, citing Sberbank, Lukoil, Magnit, Yandex, MTS and Eurasia Drilling as top picks.
At 1236 GMT, the rouble was 0.3 percent stronger at 32.90 against the dollar, as oil, Russia's main export, rose above $108 per barrel. It was 0.1 percent higher at 42.16 versus the euro and 0.2 percent stronger versus its dollar-euro basket at 37.06.
Exporters scaled up purchases of the rouble ahead of the start of monthly tax payments, for which they convert hard currency.
The rouble is also being supported by central bank interventions to stem the currency's slide. At current levels of the dollar-euro basket, the bank is selling around $200 million per day, traders say.