Geopolitical tensions remain in focus Sell-off hammers Russian bonds, rouble and stocks Rouble is 2nd Authorities do not comment on rouble weakness Finance ministry cancels weekly govt bond auctions MOSCOW, Jan 18 (Reuters) - The rouble slid towards 77 against the dollar on Tuesday and the MOEX benchmark stock index slipped sharply below 3,500 points to its lowest since February, in an ongoing sell-off triggered by tension between Russia and the West over Ukraine. The rouble losses ended a short-lived recovery on Monday that was prompted by a story in German business newspaper Handelsblatt saying Western governments were no longer considering cutting Russia off from the SWIFT global payments system if it invades Ukraine. read more A spokesperson for the White House National Security Council rejected the Handelsblatt story. The Kremlin said there was no point in discussing media speculation. By 1526 GMT, the rouble, which has been the second-worst-performing currency after the Ukrainian hryvnia so far in 2022, shed 0.7% to 76.65 against the dollar , earlier losing over 1% to a session low of 76.87. It had eased 0.3% to 87.05 versus the euro . Commerzbank predicted the rouble would weaken to 80 against the dollar by mid-2022. Russia"s currency has been haunted by the stand-off between Moscow and the West. Russia says it is concerned about NATO"s expansion, while the West says a Russian troop buildup at Ukraine"s border could be preparation for an invasion. Moscow denies it is planning to invade. The weak rouble dents living standards and spurs inflation. Finance Minister Anton Siluanov last week said the rouble"s volatility would be short-lived. read more Russia cancelled Wednesday"s weekly OFZ treasury bond auctions, citing market volatility, after 10-year OFZ yields hit their highest since early 2016 at 9.52% . Yields move inversely to price. Russia"s five-year credit default swaps (CDS), a measure of the cost of insuring against a default, were at 206 bps, near their highest since the spring 2020 COVID-19 market rout, and well above 81 bps seen in November, data from IHS Markit showed. Alfa Bank said emerging market risk aversion and geopolitical risks were also weighing on Russian stocks. "The situation remains highly uncertain and fluid. If geopolitical risks did ease, however, expect a bounce," BCS Global Markets said. Markets are also looking out for possible restrictions stemming from a sharp increase in COVID-19 cases in Russia. Brent crude oil , a global benchmark for Russia"s main export, hit a more than seven-year high of $88.13, but failed to support Russian financial markets. The rouble-based MOEX Russian index (.IMOEX) was down 5.9% at 3,351.4, after earlier hitting 3,297.12, a level last seen in early February 2021. The dollar-denominated RTS index (.IRTS) was down 6.8% to 1,427.8 points, after earlier hitting its lowest since December 2020. "The rumour is a big, global asset manager has been selling Russian shares for a week almost indiscriminately," BCS chief strategist Slava Smolyaninov told Reuters. Shares in Russia"s dominant lender Sberbank (SBER.MM) were down 9.6%, at their lowest since November 2020.