Prospect of Trump-Putin meeting lifts Russia stocks, rouble, Ukraine bonds

LONDON, Aug 7 (Reuters) - Russia's rouble strengthened, Moscow stocks jumped and Ukrainian bonds rallied on Thursday after the prospect of a meeting between Russian President Vladimir Putin and U.S. President Donald Trump fuelled hopes of easing geopolitical tensions.

Russia's main stock market index MOEX gained more than 5% to touch a near three-month peak of 2,915 points, in its strongest day in over two weeks. Gas producer Gazprom GAZP.MM enjoyed a lift of 3.4% and technology firm Yandex YDEX.MM jumped 3.2%.

The SPB Exchange, which specialised in trading foreign shares before it was hit by Western sanctions, rose 7.5%.

The gains come after an announcement by Kremlin aide Yuri Ushakov that Putin and Trump will meet in coming days - which would be the first summit between leaders of the two countries since 2021.

"Investors hope that the meeting will be a step towards normalizing the geopolitical situation," Alfa Bank analysts said in a note to clients. "The stocks of companies that benefit from the easing of tensions are growing more strongly, including Gazprom, Aeroflot AFLT.MM and Sovcomflot FLOT.MM."

Stocks with exposure to both countries also gained. Ukrainian-focused miner Ferrexpo FXPO.L rallied around 20%, while Austrian lender Raiffeisen International RBIV.VI soared more than 12%, also boosted by a Russian court lifting a freeze on its local unit.

The enthusiasm spread to FX markets, with the rouble strengthening to a two-week high against the dollar and China's yuan. The Russian currency advanced 0.7% to hit 79.45 against the dollar by 1010 GMT, according to data compiled by LSEG based on over-the-counter quotes.

The rouble strengthened by 0.6% against the yuan, Russia's most-traded foreign currency, on the Moscow Stock Exchange.

The announcement of the prospective meeting between the two leaders came a day after U.S. envoy Steve Witkoff held talks in Moscow with Putin in a push to secure a breakthrough to end the Ukraine war.

International bonds issued by Ukraine also rallied sharply, with 2035 and 2036 maturities gaining more than 4 cents on the dollar to trade between 52.5-56.7 cents, both at their highest level since mid-May, Tradeweb data showed.

The GDP-linked warrant gained 1.35 cents to stand at 76.4 cents.