MOSCOW: The rouble pared gains on Monday to weaken, its volatile trend continuing as geopolitical risks held sway over Russian assets, with concerns raised over escalating geopolitical tensions.

The United States last week said it feared Russia was preparing a pretext to invade Ukraine if diplomacy fails to meet its objectives, after a massive cyberattack splashed Ukrainian government websites with a warning to "be afraid and expect the worst".

By 0904 GMT, the rouble was 0.6% weaker against the dollar at 76.65, falling from a session high of 75.7425. It had lost 0.7% to trade at 87.62 versus the euro.

The unit suffered its biggest drop in 15 months on Thursday, after Russia said Washington's rejection of Moscow's key security demands was leading talks into a dead end.

Rouble pares losses, stocks fall as geopolitical concerns linger

Yields on Russia's 10-year benchmark OFZ government bonds, which move inversely to their price, hit their highest since early 2016 on Friday of 9.46%. On Monday, yields opened at 9.28%.

"Russia's geopolitical risk is at a local high after the failure of last week's talks and the bombastic comments that followed - the course of future events is hard to predict, but international investors will likely be hesitant for now," BCS Global Markets said in a note.

An approaching tax payment period may provide support for the rouble, said Dmitry Polevoy, head of investment at Locko Invest, but geopolitical tensions mean the exchange rate is likely to remain volatile.

Brent crude oil, a global benchmark for Russia's main export, was down 0.2% at $85.88 a barrel, pressuring Russian stock indexes, which sunk to months-long lows on Friday.

The dollar-denominated RTS index was down 0.8% to 1,472.9. The rouble-based MOEX Russian index was 0.4% lower at 3,583.9.