Moscow: Increased risks of further Western sanctions sent Russian stocks plunging on Monday to their lowest since Feb. 24, the day Moscow sent troops into Ukraine, as voting continued in referendums that could see four Ukrainian regions annexed by Russia.
High volatility has buffeted Russian markets in the last week. The rouble and stocks recovered ground after initially slumping as President Vladimir Putin said he had signed a decree on a partial military mobilisation, significantly escalating what Russia calls its "special military operation" in Ukraine.
Voting is underway in four regions mostly held by Russian forces, the start of a plan by Putin to annex a big chunk of Ukraine in what the West says is a violation of international law.
"The Russian market is likely to encounter headwinds as sanctions risk increases," said Alfa Bank Equity Strategist John Walsh, pointing to an increased possibility of fresh European Union and U.S. sanctions as fighting in Ukraine enters its eighth month.
Diplomats last week said the European Union was looking at an oil price cap, tighter curbs on high-tech exports to Russia and more sanctions against individuals.
By 1207 GMT, the rouble-based MOEX Russian index was 7.4% lower at 1,936.1 points, its lowest since Feb. 24. It has lost around 50% so far this year.
The dollar-denominated RTS index was down 7.8% to 1,053.0 points, having earlier clipped a five-month low.
Rouble gains
The rouble pared early losses to steady against the dollar in a volatile session, amid wider turmoil on FX markets as sterling tumbled to an all-time low.
The rouble was 0.1% weaker against the dollar at 57.96 , hovering close to its strongest point since July 22 of 56.6525 hit on Friday.
It had gained 1.2% to trade at 55.63 versus the euro and was unchanged against the yuan at 8.093 .
The rouble's recent strength may seem abnormal, but the Russian currency has several growth drivers, said Alor Broker in a note.
