UPDATE 1-Russian shares edge lower, rouble up on oil, debt auction

* Russian stocks fall as risk appetite wanes

* Norilsk Nickel underperforms after court ruling

* Rouble gains against dollar on higher oil

(Updates prices, adds details and trader comment)

By Maya Dyakina

MOSCOW, Oct 10 (Reuters) - Russian shares fell on Wednesday, underperformingemerging market peers, while the rouble was stronger, supported by higher oilprices and an auction for rouble-denominated treasury bonds.

The rouble-denominated MICEX index

was down 0.9 percent at 1,459.67in light trade at 1347 GMT, while the dollar-denominated RTS index


off 0.8 percent at 1,482.54. Emerging market equities

were down 0.3percent as persistent worries about the euro zone debt crisis and about globalcorporate earnings weighed on risk appetite.

"There are almost no new money inflows," said Vadim Feldblyum, a seniorclient manager at BCS.

Citibank has increased the weight of Russia's oil stocks in its portfolio,citing the new tax reform and a dividend yield of 5 percent. Russia aims toreduce the levy on future undeveloped field projects, Energy Minister AlexanderNovak said on Tuesday

. Shares of Russia's No.2 crude producerLUKOILfell 0.3 percent.

Fast-growing Russian retailer Magnit

saw minor gains in its shareprice after the company reported a 36 percent rise in September sales, but gaveup those gains to end the day in the red.

Shares of Norilsk Nickel

, the world's largest nickel and palladiumminer, was one of the major fallers, down 1.9 percent, after Russian aluminiumgroup RUSAL

won a Siberian court ruling against the company.

"It may be perceived that political support for Rusal has strengthened inconnection with the appointment of Mathias Warnig as Rusal's chairman," analystsat Alfa-bank wrote in a note, suggesting the news was negative for Norilsk.

The rouble was helped by the higher oil price, rising by 0.2 percent to31,10 against the dollar

, but was up 0.13 percent against theeuro and rose 0.2 percent against the euro-dollar currency basket.

Oil prices - a key source of revenues for Russia and a major driver of therouble - dipped slightly on Wednesday but were still above $114 a barrel afterrising more than 2 percent on Tuesday on escalating tension on the border ofTurkey and Syria.

"The rouble could strengthen even more, exporters are selling, oil pricesare supportive, OFZ auction was a success, however, client purchases (of foreigncurrency) do not let it rise," said Pavel Demeschik, a dealer at ING bank.

Russia placed almost all of the 35 billion roubles on offer of treasurybonds at auction on Wednesday, with strong foreign interest and one bid comingfrom a large state bank covering nearly 50 percent of demand.

Russian Markets Latest Net % Change % ChangeChange on yearSTOCKSMICEX1459,67 -13,27 -0,90 4,10RTS1482,54 -11,62 -0,78 7,29London ADRs854,30 -7,34 -0,85 9,74Emrg Mkt Indx993,62 -2,97 -0,30 8,43MSCI Russia792,36 -5,71 -0,72 7,55Sberbank92,01 -0,62 -0,67 16,68VTB0,05 -0,00 -0,87 -8,42Gazprom155,25 -1,90 -1,21 -9,37LUKOIL1943,90 -3,80 -0,20 14,18


135,10 -1,52 -1,11 -11,12


31,10 -0,07 -0,21 -3,26


40,11 -0,05 -0,13 -3,89

Rouble basket

35,16 -0,06 -0,17 -3,58

DEBT Bid Ask %Rtn CouponRussia 10-yr

7,63 7,60 0,16 7,60

bondMONEY MARKET Bid Ask CloseOvernight rate6,19 6,69 5,89TABLE FROM POWER PLUS PROAll data taken from Reuters at 1420 GMT($1 = 31.1605 Russian roubles)

(Reporting by Maya Dyakina; Editing by Elaine Hardcastle)