(Adds comments and details, updates prices)
By Jason Bush
MOSCOW, March 21 Russian stock indexes fell
sharply on Friday as investors digested the impact of U.S
sanctions over Ukraine, including possible moves by Washington
to target whole sectors of Russia's economy.
At 0720 GMT the rouble-denominated MICEX was down 3
percent to 1,281 points while the dollar-denominated RTS index
had fallen 3.6 percent to 1,109.
The falls came a day after U.S. President Barack Obama said
Washington was considering sanctions against key economic
sectors in Russia, including financial services, oil and gas,
metals and mining and the defence industry, if Russia made
military moves into eastern and southern Ukraine.
EU leaders, meeting in Brussels, have said they will
introduce more asset freezes and visa bans against Russian
officials, and are mulling wider economic sanctions if Russia
further destabilises the situation in Ukraine
In a morning note, Promsvyazbank analyst Oleg Shagov said
Obama had "opened a Pandora's box full of sanctions", with
future sanctions to be "directed against whole sectors of the
The United States also introduced asset freezes and visa
bans against high-ranking Russian officials and businessmen,
dubbed "cronies" of President Vladimir Putin.
A St Petersburg bank linked to these businessmen, Bank
Rossiya, was also sanctioned, with U.S. officials saying that
the bank would be "frozen" from the dollar.
On Friday, Bank Rossiya said Visa and Mastercard had stopped
providing services for payment transactions for the bank.
Earlier the bank said it was working "in a stable regime".
Bank Rossiya is not listed, but the sanctions against the
bank - coupled with the U.S. threat of further measures - has
raised fears that similar actions could be taken against other
Russian banks, echoing U.S. measures against Iran or Syria.
Investcafe analyst Grigory Birg said in a morning note that
"one can expect a sharp negative reaction in the dynamics of
Russian bank shares".
Shares in Sberbank, Russia's largest bank, were
down 2.9 percent on Friday, while shares in VTB were
down 4.3 percent.
However the falls were broad-based, with shares in most of
Russia's blue-chips also down around 3 percent.
Gas giant Gazprom was down 2.5 percent, oil
company Lukoil down 3.2 percent, steel company NLMK
down 2.9 percent and telecommunications company MTS
down 3 percent.
Shares in independent gas producer Novatek fell by 5.7
percent. The company is part-owned by Gennady Timchenko, a
shareholder of Bank Rossiya and one of the wealthy businessmen
who has been sanctioned because of alleged links with Putin.
Negative market sentiment was reinforced by warnings from
ratings agencies Fitch and S&P that they were changing their
outlooks on Russia to negative from stable, because of the
potential impact of sanctions on Russia's economy and business
climate. Both agencies presently rate Russia BBB.
Russia's Deputy Finance Minister Alexei Moiseev said in
response that he did not see any immediate impact from sanctions
on Russia's financial sector or creditworthiness.
In contrast to Russian shares, the rouble was stable on
Friday, having fallen steeply on Thursday evening in response to
the U.S. sanctions statement, and helped by the need for Russian
exporters to buy roubles to pay end of month taxes.
At 0720 GMT it was down one kopeck against the dollar at
36.39 and 0.1 percent to 50.16 against the euro.
It had fallen 0.1 percent to 42.58 against the dollar-euro
(Reporting by Jason Bush, editing by Elizabeth Piper)