UPDATE 3-Russian assets slide as Germany says Kremlin critic poisoned

* Germany says Navalny was poisoned with Novichok-type agent

* Russian assets extend losses

* Rouble was already under pressure from Belarus crisis (Adds quotes, background, releads)

By Gabrielle Tétrault-Farber and Katya Golubkova

MOSCOW, Sept 2 (Reuters) – Russian asset prices fell on Wednesday after German Chancellor Angela Merkel said Kremlin critic Alexei Navalny was the victim of a murder attempt with the Novichok nerve agent and that Russia must answer “difficult questions”.

The Russian opposition politician is in a coma in a Berlin hospital in an incident that has prompted calls by the West to investigate and could lead to further sanctions against Moscow.

Russia’s Foreign Ministry said the German assertion was not backed up by evidence. Russian prosecutors said last month they had found no sign any crime had been committed.

After opening slightly weaker against the dollar, the rouble fell 2.6% to 75.51 after the German comments, while it was down 1.9% to 89.62 against the euro.

Russian stock indexes also fell, with the dollar-denominated RTS index down 3.1% to 1,234.8 points. The rouble-based MOEX Russian index was 0.6% lower at 2,956.5 points.

Russia, which is already subject to European and U.S. sanctions after it annexed the Crimea peninsula from Ukraine in 2014, has seen its assets under pressure in recent weeks due to protests and strikes in neighbouring Belarus.

Yields of Russia’s sovereign benchmark rouble OFZ bonds edged 14 basis points higher to 6.2%.

“Geopolitical risks will hang over Russian assets this side of U.S. elections, and until and if Trump gets a second term in the White House,” Tim Ash, emerging markets senior sovereign strategist at BlueBay Asset Management, said.

Meanwhile on its local market, Russia’s Finance Ministry sold two series of OFZ treasury bonds worth a combined total of 215.39 billion roubles ($2.87 billion).

It said demand for the bonds, which generally buttresses the rouble, stood at 349.68 billion roubles.

Local investors are also awaiting the finance ministry’s announcement on Thursday of its foreign currency selling plan for the month ahead.

A Reuters survey this week showed the ministry was expected to ease its selling of foreign currency from state reserves to the equivalent of $540 million.

Brent crude oil, a global benchmark for Russia’s main export, dipped 2.1% to $44.62 a barrel, reversing its earlier course as gasoline demand fell in the United States in the latest week, an indication that economic recovery from the pandemic may be slower than expected.

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