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MOSCOW, Feb 5 (Reuters) - Russian assets reversed their early session losses on Thursday, with markets players betting that German and French leaders' visits to Kiev and Moscow would take the edge off the Ukraine crisis.
At 1427 GMT, the rouble was around 1.5 percent stronger at 66.90 rouble per dollar and traded some 1.3 percent up versus the euro at 76.48.
The dollar-denominated RTS index was 3.2 percent higher at 795 points and the rouble-based MICEX traded 2.2 percent up at 1,692 points.
German Chancellor Angela Merkel and French President Francois Hollande plan to fly together to Kiev and Moscow with a proposal to resolve the conflict.
"The decision of the German chancellor and the French president... has found a positive response from investors who saw this as hints of de-escalation," Sofia Kirsanova, an analyst at Raiffeisen Capital in Moscow, wrote in a note.
"Nevertheless, we should not forget that the European Union is still discussing the possibility of tightening sanctions against Russia ... However, market participants prefer not to take that under consideration."
On Wednesday, Standard & Poor's rating agency cut the credit ratings of several state-controlled Russian companies and leading banks, with energy companies Rosneft and Gazprom being downgraded to non-investment grade.
The downgrade came after S&P cut Russia's sovereign rating to junk last month, bringing it below investment grade for the first time in a decade on worsening monetary policy and economic growth following Western sanctions on Moscow.
"This decision had been expected but we cannot rule out a higher sell-off of shares of corresponding companies," Alexandr Kostyukov, analyst at Veles Capital in Moscow, said in a note.
Oil prices, Russia's main export, also reversed their early session losses, with Brent rising towards $56 per barrel , helping the rouble and energy assets.
Shares in Magnit, Russia's biggest food retailer underperformed the market after the company said its shareholder Lavreno Limited had placed 1 million shares at around $143 each. (Reporting by Katya Golubkova and Lidia Kelly; Writing by Lidia Kelly, editing by Elizabeth Piper and Toby Chopra)