MOSCOW: The Russian rouble weakened on Wednesday and stocks fell, with a retreat in oil prices and a threat of new sanctions on Moscow for its role in the Ukraine crisis promising to weigh on the currency in the near future.
At 1425 GMT, the rouble was around 1.7 percent weaker against the dollar at 67.96 and 1.4 percent down versus the euro at 77.10, respectively. Oil, Russia's chief export, slid towards $49 per barrel.
Russian stocks also fell, giving up their early session gains, with the dollar-based RTS index trading 1.3 percent lower at 773.4 points and the rouble-based MICEX down 0.3 percent to 1,669.8 points.
The EU has prepared a draft statement for the foreign ministers of its 28 members to agree to extend sanctions against Russia by six months, add new people to the sanctions list and prepare new measures.
Analysts said the meeting of EU foreign ministers that is to take place on Thursday was the key factor for Russian markets.
"We believe fears of new sanctions and potentially harmful anti-sanctions in response from Russia will keep investors alert and unwilling to take significant positions on the Russian stock market for a while," Slava Smolyaninov, analyst at Uralsib in Moscow, wrote in a note.
Stanislav Kleshchev, an analyst at VTB 24 bank in Moscow, wrote in a note that the EU meeting is likely to have a greater impact on trading in Moscow than the U.S. Federal reserve meeting that starts on Wednesday.
"The risk of tightening economic sanctions, whether by the extension of restrictions on the supply of equipment for power stations, or disconnecting Russia from SWIFT, or a ban on EU investors acquiring Russian sovereign debt, seems more acute than the intrigue of the terms of the Fed's monetary tightening," Kleshchev said.
The U.S. Federal Reserve's two-day meeting keeps markets wondering whether it will stand by plans to raise interest rates this year.
Russia announced on Thursday a $35 billion "anti-crisis" spending plan on Wednesday to bail out an economy battered by Western sanctions and falling oil prices, but gave few details of the deep cuts it said would be enacted this year to pay for it.
"The anti-crisis measures will include support for industry, agriculture and small businesses," Andrei Dirgin, head analyst at Alfa-Forex in Moscow, said in a note.
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