March 14, 2018 / 2:26 PM / 9 months ago

UPDATE 1-Rouble takes a punch from UK move to punish Russia

(Updates with market reaction to UK move against Russia)

MOSCOW, March 14 (Reuters) - The Russian rouble slid on Wednesday after British Prime Minister Theresa May said London would expel 23 Russian diplomats in response to a nerve toxin attack on a former double agent in southern England.

The rouble fell 0.5 percent to 57.14 against the dollar as of 1335 GMT, one hour after the UK retaliation measures were announced. Back then the rouble hovered near 56.8 versus the greenback.

Britain will expel the diplomats and introduce new measures to strengthen defences against hostile state activities. It will also freeze Russian state assets wherever there was evidence of a threat and downgrade its attendance at the soccer World Cup in Russia this summer.

“May mentioned a possible freeze of Russian assets. As Russian tycoons keep their money and have real estate there (in the UK), the rouble showed a nervous reaction to the statement,” said a dealer at a major Western bank in Moscow.

In the preceding days, market players were instead seen selling dollars for roubles to buy into Russian high-yielding government bonds, the dealer said.

Yields in Russia’s 10-year government bonds, which move in the opposite direction with their price, briefly hit 7.10 percent, their highest since March 6.

Moscow’s promise to retaliate to any UK sanctions also increased the sense of uncertainty in the market.

“Waiting for Russia’s tit-for-tat response later today,” Vladimir Miklashevsky, an analyst at Danske Bank in Helsinki, said on his Twitter.

Versus the euro, the rouble eased to 70.64 from 70.36 seen before May’s announcement of sanctions.

The stock market reaction was more muted.

The rouble-traded MOEX stock index was down 1 percent on the day at 2,295.38, near levels seen shortly before the punitive measured announced by London.

For Russian equities guide see

For Russian treasury bonds see ($1 = 56.9162 roubles) (Reporting by Andrey Ostroukh and Vladimir Abramov Editing by Hugh Lawson)

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