MOSCOW: The Russian rouble fell on Wednesday before talks aimed at bringing an end to fighting in eastern Ukraine, with analysts predicting volatile trading.
At 0840 GMT, the rouble was 1.3 percent weaker against the dollar at 66.23 and 1.2 percent down at 74.96 versus the euro.
Russia, Ukraine, France and Germany are to hold a summit in Belarus on Wednesday under a new Franco-German initiative to halt fighting in a war that has killed more than 5,000 people.
The rouble has strengthened over recent days as diplomatic efforts intensified, but the mood was cautious on Wednesday amid continuing fighting in eastern Ukraine and doubts about the outcome of the talks.
Ukraine said 19 soldiers had been killed in rebel attacks near the strategic town of Debaltseve, while rebel representatives denied an earlier report that a ceasefire had been agreed.
"The whole day the market will greedily catch any comments about the outcome of the negotiations, so high volatility in (the dollar-rouble) pair is guaranteed," said Alena Afanasieva, senior analyst at Forex Club, in a note.
"Range-trading is likely for USD/RUB prior to Minsk-related announcements. Thin trading volumes and sharp reactions to news can easily produce 2 percent or greater swings either way," Sberbank CIB analysts said in a note.
"Failure to make any concrete progress could easily put USD/RUB back on a path toward 70."
Analysts said the rouble was also being weighed down by a retreat in the oil price on Tuesday, although international benchmark Brent was slightly stronger on Wednesday, up 0.6 percent to 56.8
Despite the cautious mood on the currency market, Russian stock indexes were stronger on Wednesday, helped by more positive global markets which are anticipating progress in Greek debt talks.
At 0840 GMT the rouble-based MICEX index was up 1.2 percent to 1,762 points while the dollar-based RTS had gained 1.4 percent to 838.
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