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Rouble Up, Russian Stocks Fall, Key U.S.-Russia Talks Begin

MOSCOW, Jan 21 (Reuters) - The rouble firmed on Friday, edging away from 77 versus the dollar, while Russian stocks slid with geopolitics in focus as high level talks between Moscow and Washington to discuss soaring tensions over Ukraine began in Switzerland.

Russian Foreign Minister Sergei Lavrov and U.S. Secretary of State Antony Blinken met in Geneva amid Western fears that Russia may invade its neighbour. Russia denies planning an attack, but says it could take unspecified military action if a list of demands are not met, including a promise from NATO never to admit Ukraine.

By 0956 GMT, the rouble was 0.2% stronger against the dollar at 76.53 , coming within a whisker of 77 earlier in the session and also near its lowest since April.

The rouble will likely stay between 76 and 77 versus the greenback on Friday, said Dmitry Polevoy, head of investment at Locko Invest, with a mid-term range of 74-78.

The currency had lost 0.1% to trade at 86.80 versus the euro .

BCS Global Markets said all eyes were on the Lavrov-Blinken meeting.

"Tensions are the highest they have been in years and headlines out of the meet will surely dictate how the market moves towards the close and into next week," it said in a note.

Russian assets could come under further pressure if new sanctions are imposed, something Western powers have threatened if Moscow engages in hostilities against Ukraine, but Russian officials say the country's finances are healthy and economic fundamentals are strong.

Russia's 10-year OFZ bond yields rose to 9.41%, heading back towards the 9.52% reached earlier this week, their highest since early 2016. Yields move inversely to prices.

Brent crude oil , a global benchmark for Russia's main export, was down 1.7% at $86.86 a barrel, adding to pressure on Russian stock indexes.

The dollar-denominated RTS index was down 2.1% to 1,420.8 points. The rouble-based MOEX Russian index was 1.8% lower at 3,451.3 points.

Shares in retailer OR Group were down more than 20% after it failed to redeem bonds for 592 million roubles ($7.71 million).

($1 = 76.7480 roubles)

Reporting by Alexander Marrow Editing by Christian Schmollinger and Mark Potter

Source: Reuters

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