Igor Sechin, chief executive of Russia's biggest oil producer OAO Rosneft, has said Russian business could turn elsewhere in the case of western sanctions over Ukraine.

Sechin also said he could buy more Russian shares in Rosneft to capitalise on the "market environment" caused by possible sanctions, reported Prime news agency.

Sechin begins a trip to Asia this week as Russia eyes closer ties with the East, amid a growing rift with the US and the EU over Russian intervention in Ukraine.

The Micex index was trading 1.97% higher at 13:17 GMT, after rallying on 17 March, as investors noted that the first wave of sanctions against Moscow did not target businesses or executives.

However the rouble dropped 0.6% against the US dollar and the euro.

Boris Schlossberg, managing director and founding partner, BK Asset Management, said in a note to clients: "It's been a lackadaisical night of trade in the FX market with a mild risk off tone coming in at mid-morning European session as traders steeled themselves for President Putin's speech to the Duma at 11GMT.

"Russia has now officially recognised Crimea and is now planning first tranche of financial aid to the region. Meanwhile, the markets viewed Western sanctions announced [on 17 March] as relatively tame and the consensus view so far is that the situation in Ukraine will remain contained for the time being."

"However, we've noted earlier if Russia decides to expand its territorial claims to east Ukraine, the geopolitical conflict will escalate exponentially," Schlossberg added.

UniCredit Research said in a note to clients: "Despite uncertainty over tensions in Crimea, the [rouble] rallied up 1% vs. the USD [on 17 March], as Russian stocks also rose by almost 3.8%. Yet, we see this rally as short-lived: sentiment on Ukraine is very fragile and developments are uncertain, further weighing on the [rouble].

"In the medium term, the mix of sharply slowing domestic demand, high inflation and the possible acceleration of portfolio outflows is likely to bode very ill too."

An EU official on 17 March said the first round of sanctions would include visa restrictions and asset freezes on 21 individuals with ties to the Russian government.

Other measures, which would hit trade and cut links between Russian firms and the world financial system, could follow.