July 30, 2014 / 5:45 AM / 4 years ago

Russian assets seen sliding on sanctions, trading to be turbulent

MOSCOW, July 30 (Reuters) - Moscow shares, bonds and the rouble will most probably weaken at the open on Wednesday, after the European Union announced its widest sanctions yet against the Russian economy.

Brussels and Washington announced new punitive measures on Tuesday, targeting Russia’s energy, banking and defence sectors over what they say is Moscow’s support for rebels in eastern Ukraine. Moscow denies supporting the rebels.

Russian stocks closed little changed on Tuesday, but the dollar-denominated RTS index is down nearly 15 percent from this year’s highs seen earlier in July, before the downing of a Malaysian airliner in eastern Ukraine.

“We’re expecting a turbulent start of the trading session,” said Oleg Shagov, head analyst at Promsvyazbank in Moscow.

The rouble-denominated MICEX closed at 1,370 points on Tuesday.

“MICEX is likely to deline and linger near the 1,350 points mark,” said Anastasia Sosnova, an analyst at Rossiyski Capital in Moscow.

The new EU measures have been widely anticipated by the markets ever since the West accused the pro-Russian rebels of shooting down the MH17 on July 17, killing all 298 aboard.

Because of that, the decline is unlikely to match the market slump in early March when Moscow declared its right to defend the Russian-speaking population in Ukraine and the RTS lost $60 billion in capitalisation in one session.

Banking and financial stocks are expected to be hit however, chief among them Russia’s largest lenders Sberbank and VTB.

The financial subindex on MICEX, a market capitalisation-weighted price index of Russia’s top-tier and most liquid financial stocks, had lost 15 percent in the past two weeks.

“The news today can only add more pressure to an already challenging operating and financing environment,” analysts at Barclays wrote in a note.

The rouble is seen weakening at least 0.6 percent at the start of the session against the dollar, which would bring it down to its lowest against the greenback since mid-April.

The currency closed at 35.80 versus the dollar on Tuesday .

“A decline in the rouble-dollar pair towards 36.0 is likely at the beginning,” said Anton Startsev, head analyst at Olma investment house, in a note.

The yield on Russia’s benchmark Eurobond maturing in 2030 is expected to widen further. It closed at 4.7 percent on Tuesday, wider from the 4.1 percent seen earlier this month before the threat of new sanctions emerged.

For rouble poll data see

For Russian equities guide see

For Russian treasury bonds see

Russia in graphics: link.reuters.com/dun63s (Reporting by Lidia Kelly, editing by Elizabeth Piper)

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