MOSCOW: The rouble weakened and dollar-denominated Russian shares fell on Tuesday, dragged lower by tensions over a Russian aid convoy heading to east Ukraine.
President Vladimir Putin's spokesman said Kiev had agreed to Russia sending the convoy of about 280 trucks to Ukraine, where government forces are closing in on pro-Russian separatists in two eastern regions.
However, a Ukrainian government source said there had been no such agreement and a presidential spokesman said Kiev would not allow any Russian aid into the country if it was accompanied by the Russian military.
"Uncertainty over the format in which this humanitarian mission was agreed and what role Russia should play in it remains. This will likely continue to pressure the rouble," said Dmitry Polevoy, chief economist for Russia and CIS at ING bank.
At 1055 GMT, the rouble was 0.6 percent weaker against the dollar at 36.14 and lost 0.3 percent versus the euro to trade at 48.21.
That left the Russian currency 0.40 percent weaker at 41.56 against the dollar-euro basket.
"For several days now there have been local bids for foreign currency. It's not clear from where, but it could be linked to conversion of dividend payments," said Mikhail Palei, a trader at VTB Capital bank. "At the moment I'm not seeing exporters."
The rouble typically strengthens as the end-of-month tax period approaches, since Russian exporters with earnings in foreign currency buy large volumes of roubles to pay their monthly tax payments to the state budget.
Russian assets rallied on Monday after stock-index compiler MSCI kept Russia's two largest banks in its MSCI Russia index despite them being hit by Western sanctions, and as investors concluded tension over Ukraine was easing.
But sentiment had soured by Tuesday, with Russian shares opening weaker amid confusion as to whether Russia's aid convoy could provoke new recriminations between Moscow and the West.
By 1055 GMT, the dollar-denominated RTS index, the index most sensitive to foreign investor sentiment, was down 0.3 percent at 1,199 points. Its rouble-based peer MICEX, however, was 0.3 percent higher at 1,376 points.
Sberbank and VTB, Russia's top lenders, underperformed the broader market to trade 0.7 percent and 1 percent lower, respectively, on MICEX after rising steeply in the previous session.
Shares of oil producer Gazprom Neft, which reported a 13 percent rise in first-half net profit on Tuesday, rose 2.9 percent.
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