August 22, 2014 / 9:21 AM / 3 years ago

REFILE-UPDATE 1-Russian shares lower as Moscow warns over aid convoy

(Refiles to add dropped word in first paragraph)

MOSCOW, Aug 22 (Reuters) - Russian shares fell back on Friday after a 10-day rally, as investors focused on tensions in Ukraine after the foreign mnistry in Moscow warned against disrupting an aid convoy that finally crossed the border after a delay of several days.

Speculation about a speech later in the day by the head of the Federal Reserve that could clarify signals on when U.S. interest rates might rise added to the cautious mood.

At 0855 GMT, the dollar-denominated RTS index was down 1.4 percent at 1,257 points, while its rouble-based peer MICEX traded 1.3 percent lower at 1,442 points.

The rouble weakened against both the dollar and the euro after strong gains in the previous session.

“The market is buying on rumours and selling on facts. The rise was driven in part by events linked to the movement of the Russian convoy,” said Alexei Evsyutin, an equities salesman at BCS brokerage in Moscow.

“Market players aren’t buying for the long haul, they were able to get a small profit and that’s enough,” he said, adding that traders were nervous ahead of Fed chair Janet Yellen’s speech.

Russia’s most liquid stocks were all trading lower by early afternoon, with top bank Sberbank down 1.3 percent and oil major Rosneft 1.9 percent lower.

Russian markets have been supported in recent days by hopes for a de-escalation of the Ukraine conflict, which has prompted the West to impose several rounds of sanctions on Moscow that have spurred capital flight and dampened the outlook for Russia’s economy.

President Vladimir Putin and Ukrainian President Petro Poroshenko are due to meet on Aug. 26 in Minsk to discuss the situation in eastern Ukraine, where fierce fighting is continuing between pro-Russian rebels and government forces.

The market has taken news of the meeting as a sign that a peace deal could be thrashed out.

But news that the Russian aid convoy had crossed the Ukrainian border headed for the rebel stronghold of Luhansk and a strong statement from the Foreign Ministry threatened to ratchet up tensions once more.

“The Russian side has taken the decision to act,” the ministry said, warning against any attempts to disrupt the convoy’s movement.

“The Foreign Ministry statement, in my opinion, was the straw that broke the camel’s back. There needed to be a reason for a correction, and it appeared. Of course the risk of an unforeseen development of events has risen,” said Alexander Golovtsov, chief analyst at UralSib Asset Management.

The rouble was 0.32 percent weaker against the dollar at 36.13 and was 0.35 percent weaker at 48.01 versus the euro.

That left the currency 0.33 percent weaker at 41.47 against the dollar-euro basket the central bank uses to gauge the rouble’s nominal exchange rate.

For rouble poll data see

For Russian equities guide see

For Russian treasury bonds see

Russia in graphics: (Reporting by Zlata Garasyuta and Alexander Winning; Editing by Jason Bush and John Stonestreet)

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