* Stocks, rouble down on concerns of new EU sanctions
* Central bank surprises with hawkish rate rise
(Recasts to reflect further falls, c.bank rate hike)
By Alexander Winning
MOSCOW, July 25 Russian assets slipped on Friday
as investors took the view that a possible new wave of European
Union sanctions over Moscow's involvement in the Ukraine crisis
could cause severe damage to whole sectors of the Russian
In a sign policymakers are nervous about the impact of
sanctions - which are also being ratcheted up by the United
States - the central bank unexpectedly raised its key interest
rate by 50 basis points.
"It's clear that the key factor for market dynamics today is
the expectation of EU sanctions. ... All other information is
for the moment beyond the border of what's influencing trades,"
said Artyom Argetkin from BCS brokerage.
The dollar-denominated RTS index was down 1.5
percent at 1248.3 points at 1200 GMT, while the rouble-based
MICEX traded 1.4 percent lower at 1389.9 points.
Russian sovereign dollar bonds fell across the curve on the
sanctions fears, while the rouble weakened slightly against the
dollar, despite being boosted by the central bank rate decision
and the end-of-month tax period.
Ambassadors of the 28-nation EU are discussing options to
curb Russian access to capital markets, arms and energy
technology in response to last week's downing of a Malaysian
airliner in an area of eastern Ukraine held by Russian-backed
The EU is also expected to expand its list of those targeted
by sanctions including asset freezes on Friday due to Moscow's
perceived backing of the pro-Russian separatists fighting
Ukrainian government forces.
Earlier, the United States said Russia was firing artillery
across its border, targeting Ukrainian military positions, and
that Moscow intends to deliver heavy weapons to separatist
Russia's $1.5 billion 2043 dollar bond fell
almost 2 cents while the 2030 issue fell half a
cent. Russian yield spreads over U.S. Treasuries widened 7 basis
points to 285 bps on the EMBI Global index.
The rouble, meanwhile, was down 0.08 percent against the
dollar to trade at 35.07 but strengthened 0.08
percent versus the euro to 47.16.
"Markets-wise, the [central bank] move is marginally
supportive for the rouble, even though it won't be able to stop
foreign capital repatriation if bolder sanctions are approved,"
Dmitry Polevoy, chief economist for Russia and CIS at ING bank.
The Russian currency was 0.03 percent weaker at 40.51
against the dollar-euro basket the central bank uses
to gauge the rouble's nominal exchange rate.
Investors pulled $172 million from Russia-dedicated funds
between July 17 and 23, the largest outflow since January,
analysts at VTB Capital said in a note, citing data from
Emerging Portfolio Fund Research released on Friday.
For rouble poll data see
For Russian equities guide see
For Russian treasury bonds see
Russia in graphics: link.reuters.com/dun63s
(Additional reporting by Olga Popova in Moscow and Sujata Rao
in London; Editing by Lidia Kelly and John Stonestreet)