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Oil report

UPDATE 1-Rouble recovers with eye on geopolitics, rising COVID-19 cases in Russia

(Adds detail, updates prices)

MOSCOW, Oct 6 (Reuters) - The Russian rouble recovered from early losses on Tuesday, but its gains were capped by geopolitical concerns and fears about rising cases of coronavirus in Russia.

The currency has been plagued in recent weeks by the possibility of more sanctions against Moscow due to turmoil in neighbouring Belarus, the suspected poisoning of Kremlin critic Alexei Navalny, and a military conflict in the South Caucasus.

At 1315 GMT, the rouble was 0.4% stronger against the U.S. dollar at 77.82, heading away from the session low of 79.25 and its weakest level since March at 79.9750, hit last week.

Against the euro, the rouble firmed 0.3% to 91.81 , heading away from 93.32, the weakest level since early 2016, touched a week ago.

Russia’s daily tally of new coronavirus cases reached its highest since May 11, with daily cases in Moscow spiking above 4,000 from levels below 700 just a month ago, raising concerns about possible new lockdowns.

The central bank, which started supporting the rouble with regular foreign currency sales in March ahead of Russia’s first lockdowns, is expected to increase daily selling of foreign currency to around $111 million from Wednesday.

There are no reasons for a further substantial weakening of the rouble without an escalation of geopolitical risks, said Dmitry Polevoy, head of investment at Locko Invest.

In the short term, increased volatility will continue and the rouble may see pressure from the conversion of dividends paid by Russia’s largest lender Sberbank, Polevoy said.

Russian stock indexes were up, supported by a recovery in Brent crude oil, a global benchmark for Russia’s main export.

The dollar-denominated RTS index was up 1.5% to 1,174.6 points. The rouble-based MOEX Russian index rose 0.7% to 2,900.7 points.

For Russian equities guide see

For Russian treasury bonds see (Reporting by Andrey Ostroukh; Editing by Tomasz Janowski and Mark Potter)

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