UPDATE 2-Russian rouble and bonds take hit from Biden comments on Putin
Adds analyst comment, updates prices
MOSCOW, March 17 (Reuters) - The Russian rouble weakened by more than 1% on the day after U.S. President Joe Biden said his Russian counterpart Vladimir Putin will "pay a price" for efforts to meddle in the 2020 U.S. presidential election.
Russia's Eurobonds fell after Biden's comments and the rouble extended losses that it posted after new U.S. allegations that Putin was likely to have directed efforts to try to influence the 2020 U.S. election.
At 1233 GMT the rouble was down 1.3% at 73.77 against the dollar RUBUTSTN=MCX, heading away from the 72.53 reached on Tuesday, its strongest in more than seven months.
Against the euro the rouble weakened by 1.2% to 87.78 EURRUBTN=MCX, heading away from the 86.5150 hit in the previous session, its strongest since mid-August.
The sell-off in the rouble intensified after Biden was quoted by ABC News as saying that Putin will face consequences for directing efforts to swing last year's U.S. election in Donald Trump's favour. nL1N2LF0WA
"There will be more sanctions coming, that is clear. The question is how severe?" said North Asset Management's Peter Kisler.
The Russian embassy in the United States had earlier dismissed the U.S. report on Moscow's alleged interference as "another set of baseless accusations". nL8N2LF0XY
The geopolitical premium for the rouble remains significant. The rouble traded at about 61 to the dollar in early 2020, when oil prices were last near current levels of $68 a barrel.
Fund manager Kisler said that Washington could impose sanction against the purchase of rouble-denominated OFZ treasury bonds by U.S. banks directly from the Russian finance ministry.
"It would be enough for a nice drop in the rouble," Kisler said, predicting that the Russian central bank would step in to steady the currency if needed.
Yields on Russia's 10-year OFZ bonds, which move inversely to their prices, jumped to 6.9% RU10YT=RR, their highest since April 2020, also pricing in expectations that the central bank will soon start raising interest rates.
A Reuters poll this week showed the central bank was expected to keep the key rate at 4.25% on Friday. But some analysts, including at Russia's biggest lender Sberbank SBER.MM, now expect a rate increase this week.
Russian stock indexes also extended losses after Biden's comments.
The dollar-denominated RTS index .IRTS fell 3.4% to 1,500.6 points. The rouble-based MOEX Russian index .IMOEX shed 2.1% to 3,513.9 points, heading away from this week's record high of 3,587.24.
(Reporting by Andrey Ostroukh in Moscow
Additional reporting by Marc Jones in London
Editing by David Goodman)