* Rouble recovers after setting 3-1/2 month low
* Government backs key 2010 budget figures
* Spike in oil price lifts Russian stocks
(Wraps rouble, stocks, government meeting)
By Andrei Ostroukh
MOSCOW, July 13 (Reuters) - The Russian rouble rebounded on central bank interventions and a brief spike in the oil price on Monday after dipping below the 39 mark versus a euro-dollar basket on Monday for the first time since March.
The rouble weakened as far as 39.03 versus the dollar/euro
basket the central bank uses as a policy guidance
Dealers said the central bank was selling foreign currency at 38.90 and then at 38.95. One dealer estimated the sales at $1.5 billion. The rouble also followed the oil price higher, though trade closed before a retreat in crude.
"Exchange rate stability is still the government's priority, in our view. But were oil prices to continue falling, the central bank might allow the rouble to weaken to 41 against the euro-dollar basket," VTB Capital said in a research note.
The government also backed the key figures for the draft 2010 budget, which will be based on the average annual price of oil at $55 per barrel and sees next year's economic growth at one percent.
Oil prices slipped more than $1 to below $59 a barrel on
Monday, hitting their lowest in almost two months on concerns
over the state of the global economy. Russia's Urals blend of
oil
However, during the trading session oil rose $1 a barrel to above $61, climbing as stock markets rallied and as some investors saw buying opportunities after prices fell sharply last week.
SOME PROGRESS ON DEBT
The central bank has set the rouble's trading band at 26 to 41 versus the basket after a controlled devaluation last January, but has left itself the right to intervene within the corridor to smooth out excessive market volatility.
The central bank said it will defend this corridor provided the oil price does not fall to $30 per barrel and stay there.
If oil price falls further, Russia is unlikely to pay tens of billions of dollars again to defend the rouble as it did six months ago, since the widening budget deficit would put more fiscal pressure on Russia and a devaluation bring welcome relief.
A brief spike in oil prices also nudged key share indexes,
supported through out the day by resilient energy shares, into
positive territory on the back of oils such as index heavyweight
LUKOIL
"Oil moves determine the direction of our stock market and, the rouble, too. Oil shares were oversold and that was enough to lift the MICEX index," East Commerce trader Pavel Koryshev said.
SUFFERED A ROUT
The MICEX <.MCX> index rose 0.62 percent and the RTS <.IRTS>
rose 0.05 percent, shaking off pressure from Sberbank shares,
unchanged at 1428 GMT, and VTB
Russian credit default swaps (CDS) which indicate cost of insuring against a possible sovereign default fell to 373 after initially rising to 380.2 375.3 on Friday's close.
Russia's biggest raw materials exporters have enjoyed a price reprieve in the past three months and several big debtors have made headway with creditors.
Coking coal miner Mechel
Foreign debt repayments are negative for the rouble, as companies sell the domestic currency to buy dollars or euros.
But in the middle echelons of the economy, manufacturing suffered a rout. The Economy Ministry estimated the fall in industrial production at 14.9 percent for the first half of the year and a 10.2 percent decline in gross domestic product.
The central bank, keen for domestic banks to boost lending to the real economy, cut interest rates for the fourth time effective from Monday. (Reporting by Zlata Garasyuta and Andrei Ostroukh; Additional reporting by Melissa Akin, Toni Vorobyova and Carolyn Cohn; Editing by Victoria Main)