February 17, 2015 / 8:25 AM / 4 years ago

UPDATE 2-Russian assets slip as oil rally and Ukraine truce falter

(Adds details and comment, updates prices)

MOSCOW, Feb 17 (Reuters) - The rouble and Russian shares slipped on Tuesday as oil prices went into reverse and fighting intensified in eastern Ukraine, pushing last week’s peace deal aimed at ending the 10-month-old war there closer to collapse.

At 1522 GMT, the rouble was flat against the dollar at 63.19 and down 0.2 percent to 71.95 versus the euro .

Russian stock indexes slipped into the red towards evening, having been buoyed earlier on by the oil price and European markets that shrugged off Monday’s failure to reach a deal on Greece’s debt problems on Monday.

At 1525 GMT the dollar-based RTS index was down 0.5 percent to 893 while the rouble-based MICEX was down 0.5 percent at 1,791.

International oil benchmark Brent continued to rally in the morning but then fell back and was down over 1 percent to $60.6 by evening.

“We suspect (the rouble) is now in for a tougher period in the near term. USD/RUB has declined to a level that is appropriate given the Ukraine-related risk premium,” analysts at Sberbank Investment Research said in a note.

Hopes that last week’s peace deal in Minsk would end the war in eastern Ukraine have been all but scuppered, with pro-Russian rebels continuing attacks on the town of Debaltseve, the focus of recent fighting, in defiance of a ceasefire.

“Investors are much more worried about the situation around Debaltseve (than Greece), threatening the fragile truce in the Donbass,” VTB24 analyst Oleg Dushin said in a note.

“Recalling how events developed after the first version of the ‘Minsk peace’ (in September), one can with high certainty note that in future things will only get worse,” said Andrei Dirgin, head analyst at Alfa-Forex, in a note.

The progress of peace efforts in Ukraine is a crucial driver for Russia’s financial markets because the future of Western sanctions against Russia hinges on these efforts. (Reporting by Lidia Kelly and Jason Bush; Editing by Hugh Lawson)

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