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Russian assets tread water as oil rally falters

* MICEX and RTS give up opening gains as oil weakens

* Megafon IPO seen impacting Russian telecom stocks

* Rouble flat against dollar, gains against euro

By Jason Bush

MOSCOW, Oct 9 (Reuters) - Russian stocks were flat on Tuesday morning, hampered by a faltering rally in oil prices and telecoms stocks showing little reaction to a $2 billion IPO announcement by mobile operator Megafon.

At 0810 GMT the rouble-denominated MICEX index

was

barely changed at 1473.4 points, while the dollar-denominated RTS

had risen 0.1 percent to 1494.0.

Assets had tracked the oil price upwards at opening, with Brent rising towards $113 on the back of tensions in the Middle East, but the gains proved short-lived as oil fell back towards $112 during the morning.

Analysts said that Russia's markets are mainly being driven by international developments, with attention focused on Tuesday on German chancellor Angela Merkel's visit to Greece, and the start of the U.S. earnings season.

Both are important drivers for global appetite for risk and oil prices.

There was confirmation of activity returning to Russia's capital market on Tuesday, with an announcement by Megafon, its second largest mobile phone operator, of an IPO in London expected to be worth around $2 billion.

Analysts at Alfa Bank wrote that they expected the placement to put downward pressure on fellow mobile operators, Moscow-listed MTS

and New York-listed Vimpelcom

, as investors sell shares in these companies in order to buy Megafon stock.

However, shares in MTS were up 0.2 percent on Tuesday morning, while fellow Moscow-listed telco Rostelecom

was up 0.5 percent.

The rouble rose against the euro, which has weakened on the back of fresh concerns about Spain's debts, but was little changed against the dollar.

At 0810 GMT the rouble had gained one cent against the dollar to 31.15

, and 0.4 percent to 40.27 against the euro , leaving it 0.2 percent firmer at 35.25 against the euro-dollar currency basket .

The yield on Russia's benchmark 2030 Eurobond

was also little changed at 2.91 on Tuesday morning, compared with 2.90 the previous day. Russian Latest Net % % Change Markets Change Change on year STOCKS MICEX 1473,39 -0,22 -0,01 5,07 RTS 1494,01 1,50 0,10 8,12 London 863,23 -0,32 -0,04 10,89 ADRs Emrg Mkt 998,36 0,43 0,04 8,94 Indx MSCI 799,25 -0,21 -0,03 8,48 Russia Sberbank 92,35 -0,25 -0,27 17,11 VTB 0,05 0,00 0,06 -7,04 Gazprom 158,92 0,02 0,01 -7,23 LUKOIL 1947,00 13,40 0,69 14,36 Rostelecom 134,52 0,72 0,54 -11,50 Dollar/Rou 31,15 -0,01 -0,03 -3,10 le Euro/Roubl 40,27 -0,15 -0,37 -3,52 Rouble 35,25 -0,07 -0,21 -3,32 basket DEBT Bid Ask %Rtn Coupon Russia 7,66 7,65 0,11 7,60 10-yr bond MONEY Bid Ask Close MARKET Overnight 5,85 6,35 5,44 rate TABLE FROM POWER PLUS PRO

All data taken from Reuters at 0810 GMT

(Reporting by Jason Bush; editing by Patrick Graham)

((jason.bush@thomsonreuters.com)(Tel: +7 495 775 1242))

Keywords: RUSSIA MARKETS/