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Russian stocks, rouble edge lower along with oil

* Russian stocks fall, tracking oil and emerging markets

* Strong services data points to economic resilience

* Central bank hints at higher interest rates

By Maya Dyakina

MOSCOW, Oct 3 (Reuters) - Russian shares and the rouble extended losses on Wednesday, in reaction to lacklustre economic data in China and falling oil prices, with strong domestic services PMI data doing little to lift the market.

At 0738 GMT, the dollar-traded RTS index

had shed 1.1 percent to 1,490.7 points and the rouble-based MICEX

was down 0.7 percent to 1,474.8.

Russian markets fell together with emerging market equities

, which have been hurt by further signs of a slowdown in China, where the purchasing managers index for the service sector has declined to its lowest in nearly two years.

However, growth in Russia's own service sector accelerated in September, suggesting the economy is surprisingly resilient despite recent fears over slowdown.

"This (data) is in line with our base case, where macro momentum improves towards the end of the year," Uralsib analysts wrote in a note. They pointed to the likelihood of renewed inflows into Russia funds, saying this should ultimately drive stock prices higher with the RTS index at 1,760 by year-end.

The data follows central bank comments ahead of a policy meeting this week that inflation is a greater risk than an economic slowdown.

The central bank sees the current interest rate corridor as "too wide", First Deputy Chairman Alexei Ulyukayev said in an interview with TV channel Russia 24 on Tuesday, adding that it may hike a deposit rate which stands at 4.25 percent to narrow the range

.

"We note that Ulyukayev is the key decision-maker in the issues of monetary policy and any such mentioning of the likely moves in the past by him has led to an actual policy move by the CBR. Therefore, we think that another rate hike this week is presently all but certain", an economist at Bank of America Merrill Lynch, Vladimir Osakovskiy, wrote in a note.

An overnight fall in Brent crude prices to below $111 per barrel from around $112 soured the investor mood

, putting pressure on the rouble.

The Russian currency shed 0.4 percent to 31.20 against the dollar

, and eased 0.1 percent to 40.25 against the euro .

The rouble weakened 0.3 percent to 35.27 against the euro-dollar basket

, and was trading in the range where the central bank carries out no interventions.

The Russian debt market is in focus on Wednesday. The finance ministry will offer OFZ treasury bonds

with an 8.15 percent coupon, and yield guidance of 8.18-8.23 percent, maturing in 2027 and worth 25 billion roubles.

Analysts said demand at the auction was likely to equal the offer, given a rare premium to the secondary market and the paper's cheapness compared with its peers.

"OFZ liberalisation is on the agenda and the Central Depository could be launched in November ... OFZ 26207 is relatively cheap compared with its neighbours on the curve. We believe it therefore makes sense to participate in the auction at the upper yield of the guidance," analysts at VTB Capital wrote in a note.

Russian Markets Latest Net % % Change Change Change on year STOCKS MICEX 1474.83 -10.80 -0.73 5.18 RTS 1490.67 -17.10 -1.13 7.87 London ADRs

862.11 -7.74 -0.89 10.75

Emrg Mkt Indx

1003.88 -2.35 -0.23 9.55

MSCI Russia

800.37 -7.79 -0.96 8.63

Sberbank

91.49 -0.41 -0.45 16.02 VTB 0.05 0.00 0.42 -6.82

Gazprom

158.08 -1.27 -0.80 -7.72

LUKOIL

1955.00 -6.50 -0.33 14.83

Rostelecom

136.24 -1.66 -1.20 -10.37

Dollar/Rouble

31.20 0.12 0.38 -2.95

Euro/Rouble

40.25 0.06 0.14 -3.56

Rouble basket

35.27 0.09 0.26 -3.26 DEBT Bid Ask %Rtn Coupon Russia 10-yr bond 7.78 7.75 0.12 7.60 MONEY MARKET Bid Ask Close Overnight rate 5.24 5.74 5.79 TABLE FROM POWER PLUS PRO

All data taken from Reuters at 0738 GMT

(Reporting by Maya Dyakina; editing by Jason Bush; editing by Stephen Nisbet)

((maya.nikolaeva@thomsonreuters.com)(Tel: +7 495 775 1242))

Keywords: RUSSIA MARKETS/