UPDATE 1-S&P raises Russia ratings, lowers outlook to stable from positive

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Feb 23 (Reuters) - S&P Global Ratings raised its foreign currency long-term and short-term sovereign credit ratings on Russia to 'BBB-/A-3' from 'BB+/B'.

The outlook on Russia is lowered to stable from positive, S&P said. http://bit.ly/2Fsokoq

The rise in the ratings is a reflection of Russia's policy response which lets the economy adjust to lower commodity prices and international sanctions, the statement added.

Steps taken by the Russian central bank have maintained financial stability, according to the statement.

The country's strong net external asset position, low government debt and comparatively high monetary flexibility support the rise in the ratings, S&P said.

Russia's economic recovery is expected to continue through 2021, S&P said on Friday, adding that it projects Russia's GDP growth rate to rise to 1.8 percent in 2018.

International sanctions and geopolitical tensions will continue to restrict Russia's trend growth and attempts to diversify the economy due to investor uncertainty, S&P said in a statement.

S&P said it expects sanctions imposed by the United States and European Union in 2014 to remain in place during the forecast period.

Washington imposed sanctions on Russia over its 2014 annexation of Crimea with the sanctions targeting some of the most important sectors of the Russian economy by limiting U.S. financing available to some of Russia's most powerful energy enterprises and banks.

The United States is working on new sanctions against Russia for a range of activities, including alleged meddling in the 2016 U.S. presidential election, U.S. Treasury Secretary Steve Mnuchin said on Friday. Russia denies meddling in the election.

S&P said it does not see a notable decline in the state's role in the Russian economy with a "high centralization of power" in the country, according to the statement.

The ratings agency said it expects macroeconomic stability after the Russian presidential elections in March. (Reporting by Kanishka Singh in Bengaluru; Editing by Angus MacSwan)