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UPDATE 1-Russian shares continue rally, rouble firms on oil

* Rouble edge up vs dollar on oil

* Stocks indexes creep higher

* Worries about euro zone, China growth weigh

(Adds quotes, detail, updates prices)

MOSCOW, Oct 1 (Reuters) - Russian shares extended fragile gains on Monday, helped by a buoyant mood on global markets, while the rouble inched higher, catching up with an oil price recovery.

At 1423 GMT, the rouble-denominated MICEX exchange

rose 1.9 percent to 1,485.9 points. The dollar-denominated RTS index was up 2.4 percent to 1,511.1.

Russian stocks await a boost in fund flows from the U.S. Federal Reserve's stimulus plan, but the market is not yet positioned for a rally, having a larger proportion of long positions, said Ivan Samokhin at Aton brokerage.

In a sign of lukewarm investor interest, market volatility and declining trading volumes in Central and Eastern Europe, including Russia, has forced Dutch bank ING

to close its equity markets desk for the region.

Russian stocks have underperformed the price of oil and languish at a 50 percent valuation discount to other emerging markets.

However, stocks were supported on Monday by Russia's PMI manufacturing data showing monthly growth.

"Importantly, output growth strengthened at the end of the third quarter, signalling a still solid pace of production expansion," Alexander Morozov, chief economist for Russia at HSBC, said in a note.

The data provided an argument for Russia's central bank to continue monetary policy tightening, Morozov added.

The regulator surprised the market by raising all its key interest rates in mid-September, attracting carry trade and pushing the rouble higher.

Economists, polled by Reuters last Friday, expected rates to stay on hold in October because of slowing economic growth in Russia

.

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CURRENCIES SO FAR IN 2012 Graphic:

EMERGING MARKET EQUITIES SO FAR IN 2012

Graphic:

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A recovery in the oil price - a key source of revenues for Russia - helped the rouble to firm.

The rouble was up 0.5 percent versus the dollar at 31.03

.

Overall, the rouble has gained 3.0 percent against the greenback this year, outperforming its BRIC peers.

The Russian currency firmed 0.3 percent to 35.11 against the euro-dollar basket

. It was flat versus the euro at 40.10

.

Better than expected U.S. manufacturing data eclipsed the signs of weakness in China

and Brent crude futures rose 0.3 percent to $112.7 per barrel.

"In general, hope for positive trends, for central banks' stimuli, are prevailing, but the euro zone economy remains weak," said Igor Akinshin, a dealer at Alfa Bank, adding that the rouble may get stuck in the range of 34.65-35.65 against the basket, where Russia's central bank does not intervene.

Also overhanging markets is weak Chinese and euro zone manufacturing data, highlighting the frailty of the global economy

and continuing uncertainty over a bail-out for Spain, whose credit rating is due for a review by Moody's Investors Service.

A Reuters poll last week showed the rouble weakening to 31.71 against the greenback by the end of 2012

. On Monday non-deliverable forwards showed the rouble at 31.7890 per dollar in three months' time .

The Russian debt market was broadly flat on Monday. The yield on Russia's benchmark Eurobond maturing in 2030

fell to 2.96 percent from 2.98 percent on Friday.

LIVE DATA BELOW DRIVES FORMATTED TABLE ABOVE

Russian Markets Latest Net % Change % Change Change on year STOCKS MICEX 1485.88 27.62 1.89 5.97 RTS 1511.05 35.35 2.40 9.35 London ADRs

872.00 20.45 2.40 12.02

Emrg Mkt Indx

1006.00 3.34 0.33 9.78

MSCI Russia

810.14 19.01 2.40 9.96

Sberbank

92.17 1.18 1.30 16.88 VTB 0.05 0.00 1.28 -8.40 Gazprom 160.36 2.61 1.65 -6.39 LUKOIL 1951.40 29.10 1.51 14.62 Rostelecom 138.04 3.64 2.71 -9.18 Dollar/Rouble

31.03 -0.15 -0.49 -3.46

Euro/Rouble

40.10 -0.02 -0.05 -3.94

Rouble basket

35.11 -0.09 -0.26 -3.71

DEBT Bid Ask %Rtn Coupon Russia 10-yr bond 7.88 7.76 -0.62 7.60 MONEY MARKET Bid Ask Close Overnight rate 5.90 6.40 5.00 TABLE FROM POWER PLUS PRO

All data taken from Reuters at 1423 GMT

(Reporting by Maya Dyakina, additional reporting by Zlata Garasyuta and Vladimir Abramov, editing by Jason Bush and Robert Woodward)

((maya.dyakina@thomsonreuters.com)(+7-495-775-12-42))

Keywords: RUSSIA MARKETS/