MOSCOW Moscow stocks fell on Thursday for the second day this week after Crimea's parliament voted to join Russia and the United States ordered an asset freeze and visa bans against those involved in Russia's military intervention in the Ukrainian region.
At 1338 GMT (8:35 ET), the dollar-denominated RTS index was down 2.8 percent to 1,148 points .IRTS, deepening further losses seen after the Crimean parliament's unanimous vote to annex the region to Russia.
Crimea's vice premier said a referendum on the region's status would be held on March 16 and would ask whether Crimea should become part of the Russian Federation [ID:nL6N0M31S4]. A Ukrainian minister said such a referendum would be illegitimate.
U.S. President Barack Obama ordered visa bans on individuals and entities involved in threatening the territorial integrity of Ukraine and said additional steps, such as sanctions were possible.
The ruble-traded MICEX lost 2.2 percent on the news to trade at 1,321.1 points.
Mikhail Kantolinsky, equity trader at Uralsib in Moscow, said that local traders had two concerns:
"There is a fear of a war and there is a fear of a potential Ukraine default," Kantolinsky said. "The Crimean authorities are inclined to become part of the Russian Federation - Kiev, of course, will be against, and that means that an armed conflict may be inescapable."
The moves to formally bring the Crimea, which has an ethnic Russian majority and has effectively been seized by Russian forces, under Moscow's rule came as EU leaders gathered for an emergency summit to seek ways to pressure Russia to back down and accept mediation [ID:nL6N0M320U].
Moody's ratings agency said on Thursday that Russia's actions in Ukraine were negative for Russia's sovereign creditworthiness [ID:nL6N0M32W0]. Moody's and the Fitch ratings agency said the crisis would weigh on Russia's economy. [ID:nFit692309]
"This negative sentiment, which is likely to translate into increasing net private sector capital outflows that have already been a structural impediment to Russia's economic development, will negatively affect Russia's GDP growth," Moody's said in a statement.
"The threat of potential political and economic sanctions from the West could further undermine investor sentiment and affect the creditworthiness of Russian borrowers."
Analysts at ING Bank in Moscow, estimate that should the conflict in Ukraine escalate dramatically, capital outflow from Russia could reach $100-$150 billion by the end of the year.
"In such circumstances, a fair exchange rate would be in the range of 39 rubles to 42 rubles per dollar," the analysts said in a note. For now, however, they retained their 2014-end forecast of the ruble at 35.70 rubles to the dollar.
Analysts polled by Reuters before President Vladimir Putin declared at the weekend Russia had the right to invade Ukraine, forecast capital flight from Russia at $56 billion.
The ruble was down 0.5 percent against the dollar at 36.21 at 1405 GMT and down 0.9 percent versus the euro at 50.00, increasing its early-day losses.
Analysts at VTB Capital reckon that the ruble is about 8.0-8.5 percent behind the emerging-market average index so far this year, and Ukraine's political crisis has accounted for 2.0-3.0 percentage points of that.
(Writing by Lidia Kelly; Editing by Jon Boyle)