* Rouble intraday gains reach 1% vs dollar
* Rouble, stocks up as risk aversion fades
* Russia-West talks in focus
* Finance Ministry to hold weekly OFZ bond auction on Weds
MOSCOW, Feb 1 (Reuters) - The Russian rouble firmed past 77 against the U.S. dollar and stock indexes climbed on Tuesday, recovering further after a large-scale sell-off in January caused by increased tensions between Moscow and the West.
The rouble is moving away from a near 15-month low of 80.4125 versus the greenback hit last week, battered by tensions with Western powers threatening to impose new sanctions on Russia if it takes aggressive steps towards Ukraine.
By 1327 GMT, the rouble had firmed 0.8% to 76.73 per dollar after hitting 76.45, its strongest since Jan. 21. Against the euro, the rouble gained 0.7% to 86.38 .
As a sign of normalisation of market sentiment, the finance ministry said it will resume weekly OFZ government bond auctions this week after suspending them twice earlier this year amid the rouble crash.
On Tuesday, the market is awaiting developments from a meeting between Russian President Vladimir Putin and Hungarian Prime Minister Viktor Orban, as well as from phone conversations between Foreign Minister Sergei Lavrov and U.S. Secretary of State Antony Blinken.
"The sanctions rhetoric continues and recent market gains are fragile, ready to break at a headline's notice," BCS Global Markets said in a note.
"If the geopolitical tensions do not escalate, we expect the rouble may be able to gain a foothold around 77," Sberbank CIB said in a note.
The Russian market is in the middle of a storm, which could provide the rouble and stocks with substantial room for upside moves when it is over, said Sofia Donets, chief economist at Renaissance Capital.
The rouble is expected to average 75 versus the dollar in February, according to VTB Capital's revised model, which assumes a stable foreigners' share in Russian government bonds, oil prices at $90 per barrel and no increase in emerging markets' risk premium.
Brent crude oil, a global benchmark for Russia's main export, was down 0.7% at $88.89 a barrel, but still hovering near levels last seen in October, 2014 and supporting Russian stock indexes.
The dollar-denominated RTS index rose 2% to 1,464.0 points. The rouble-based MOEX Russian index was 0.9% higher at 3,563.1 points, moving away from its lowest level since August 2020 of 3,158.46 it touched during the sell-off last month.
"Cheap valuations propel Russian equities... An easing of risk perception surrounding the tensions with Ukraine and NATO is fueling the recovery," Alfa Bank said in a note. (Reporting by Andrey Ostroukh; Editing by Kim Coghill and Bernadette Baum)
