November 17, 2014 / 10:36 AM / in 5 years

UPDATE 2-Russian assets gain after EU holds off on new sanctions

(Adds details, updates prices)

By Jason Bush

MOSCOW, Nov 17 (Reuters) - Russian stocks saw a small bounce on Monday, while the rouble was steady, after the European Union decided not to impose more sanctions against Russia for now over Moscow’s actions in Ukraine.

EU foreign ministers agreed to put more Russia-backed Ukrainian separatists on their sanctions list, but did not extend measures against Russia itself.

The decision helped the rouble recover after falling early on Monday as the price of oil, Russia’s major export, dropped more than $1 to just over $78 a barrel.

It has hit after the International Energy Agency on Friday said it expected downward pressure on oil prices to continue.

At 1410 GMT the rouble was down 0.1 percent against the U.S. dollar at 47.31, and was 0.1 percent stronger at 59.10 against the euro.

The market shrugged off the central bank’s debut auction of one-year dollar repos, part of a scheme to provide foreign currency loans to Russian banks and shore up the ailing rouble, even though the sale drew weak demand.

For most of the day the rouble had been down around 0.3 percent against the dollar and 0.1 percent against the euro, but rallied after the EU decision, briefly entering positive territory against the dollar before falling back.

The dollar-denominated RTS stock index was up 0.2 percent at 1,005 points, while the rouble-based MICEX was up 0.4 percent at 1,506 points.

Investors had been wary ahead of the EU foreign ministers meeting, although EU officials had earlier said new sanctions against Russia were not likely at this stage.

Russian President Vladimir Putin came under heavy criticism at a G20 summit over the weekend, where Western leaders accused him of continuing to destabilise Ukraine in violation of a September peace agreement.

At the central bank’s auction of 1-year dollar repos, banks demanded just $87.7 million, out of $10 billion on offer.

The central bank said the low demand showed that a shortfall of forex had been addressed, while analysts said that it was negative but not a crucial factor for the rouble.

“All of the focus of investors right now is much less on this technical shortage of dollars in Russia ... and much more on the oil prices which are below $80,” said Rosbank analyst Yury Tulinov.

Separately, the Ministry of Finance said on Monday it had placed $2.1 billion in a 28-day deposit auction, compared with a limit of $3 billion, in another step by the Russian authorities to meet heavy demand for foreign currency. (Editing by Susan Fenton)

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