GRAINS-Soybeans and corn hold firm with sanctions and trade talks in focus

PARIS/BEIJING, Oct 23 (Reuters) - Chicago soybean and corn futures extended gains on Thursday to reach one-month highs, spurred by a jump in crude oil following U.S. sanctions on Russia's two biggest oil firms along with hopes for progress in U.S.-Chinese trade talks.

Wheat also edged up, with news of an import purchase by Algeria lending some support.

The most-active soybean contract on the Chicago Board of Trade (CBOT) Sv1 was up 0.4% at $10.38-1/2 per bushel, after earlier hitting its highest since September 19. CBOT corn Cv1 added 0.3% to $4.24-1/4 a bushel after touching its highest since September 26.

Crude oil surged 5% after the U.S. imposed sanctions on major Russian suppliers Rosneft ROSN.MM and Lukoil LKOH.MM over the Ukraine war. Soybeans and corn can react to oil prices as the crops are widely processed for use in biofuel. O/R

"Grains and beans are supported by the strength of the crude market," said Andrey Sizov, head of consultancy Sovecon. "Things are heating up around Russia."

Together with ongoing military strikes, including Ukraine's targetting of a Russian chemical plant using Western Storm Shadow missiles, the sanctions have dimmed immediate prospects for a ceasefire in the 3-1/2 year conflict.

The soybean market has also found support in hopes for a trade deal between Washington and Beijing, after their standoff this year halted massive U.S. soybean sales to China.

U.S. President Donald Trump maintained an upbeat tone about reaching agreements with his Chinese counterpart Xi Jinping when they are due to meet in South Korea next week, reiterating that the resumption of soybean purchases as a key area of discussion.

Meanwhile, Japan's new government is finalising a purchase package - including U.S. soybeans - to present to Trump in talks next week, two sources told Reuters.

Price gains for corn and soybeans remained capped by ample supplies from this year's South American crops and the ongoing U.S. harvest.

However, expectations that U.S. yields will fall short of the most recent official forecasts were tempering supply pressure in the absence of further updates from the U.S. Department of Agriculture due to a government shutdown.

CBOT wheat Wv1 ticked up 0.3% to $5.05-1/4 a bushel, but remained near a 5-year low struck last week.

European traders said Algeria's state grains agency OAIC bought around 600,000 metric tons of wheat in an international tender on Wednesday.

Competitive prices for Argentine wheat, which traders said was in contention to fill some of the Algerian order, were keeping attention on large production in major exporting countries.