MOSCOW, Aug 9 (Reuters) - The Russian rouble and shares in Aeroflot fell to two-year lows on Thursday, extending losses after the United States promised to impose more sanctions on Moscow by the end of this month.
Washington said fresh sanctions were needed after it determined that Moscow had used a nerve agent against a former Russian agent and his daughter in Britain.
The rouble dropped to its weakest level since Aug. 2, 2016 of 66.73, before pairing some losses to 66.28 as of 0720 GMT .
The Russian currency is on track for its deepest weekly fall since early April when it lost 6.7 percent in five trading days after Washington imposed sanctions on Russian companies to punish Moscow for its “malign activities.”
Moscow has repeatedly denied any wrongdoing. On Thursday Russia’s embassy to the United States called the new sanctions draconian and said the allegations of using the nerve agent were far-fetched.
Thursday’s drop in the rouble follows a massive sell-off on the Russian market the day before after the Kommersant daily published what it said was the full text of a draft U.S. law detailing possible penalties against Russia.
Even though the measures would still have to pass through Congress, analysts warn of dire consequences for the rouble.
“If the bill becomes law and Russia retaliates, we estimate that USD/RUB could move to 72.00, while EUR/RUB could hit 83.50, as any major selloff of Russian local debt, local credit and stocks would amplify outflows from the rouble,” Danske Bank said in a note.
Versus the euro, the rouble shed 0.6 percent to 76.58 after briefly touching its weakest level since April 11 of 77.33 .
Russian stock indexes were down. The dollar-denominated RTS index shed 3.4 percent to 1,076.7 points, its lowest since April 11. The rouble-based MOEX Russian index was 1.4 percent lower at 2,261.5 points.
Shares in Aeroflot fell 12.25 percent to 98.15 roubles, a low last seen in August 2016, after Washington said it was considering suspending Aeroflot flights to the United States.
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Reporting by Andrey Ostroukh Editing by Robin Pomeroy