UPDATE 3-Russian stocks sink to Feb. 24 lows, volatile rouble slips vs dollar

*

Russian stocks sink to Feb. 24 low

*

Stocks down around 50% year-to-date

*

Rouble steadies near 58 vs dollar

*

Currency approaches near 3-mth high vs euro

*

This content was produced in Russia where the law restricts coverage of Russian military operations in Ukraine

(Updates prices)

By Alexander Marrow

MOSCOW, Sept 26 (Reuters) - The risk of further Western sanctions sent Russian stocks plunging on Monday to their lowest since Feb. 24, the day Moscow sent troops into Ukraine, as voting continued in referendums that could see four Ukrainian regions annexed by Russia.

High volatility has buffeted Russian markets in the last week. The rouble and stocks recovered ground after initially slumping as President Vladimir Putin said he had signed a decree on a partial military mobilisation, significantly escalating what Russia calls its "special military operation" in Ukraine.

Voting is underway in four Ukrainian regions mostly held by Russian forces, the start of a plan by Putin to annex a big chunk of the country in what the West says is a violation of international law.

"The Russian market is likely to encounter headwinds as sanctions risk increases," said Alfa Bank Equity Strategist John Walsh, pointing to an increased possibility of fresh European Union and U.S. sanctions as fighting in Ukraine enters its eighth month.

Diplomats last week said the European Union was looking at an oil price cap, tighter curbs on high-tech exports to Russia and more sanctions against individuals.

By 1310 GMT, the rouble-based MOEX Russian index was 5.6% lower at 1,972.5 points, after earlier slumping to as low as 1,841.42, its weakest since Feb. 24. It has dropped around 50% so far this year.

The dollar-denominated RTS index was down 6.5% to 1,067.3 points, having earlier clipped a five-month low.

VOLATILE ROUBLE SWINGS

The rouble swung this way and that against the dollar in a volatile session, amid wider turmoil on FX markets as sterling tumbled to an all-time low against the dollar.

The rouble moved in a wide range to the dollar before settling 0.5% weaker at 58.19, though not far from its strongest point since July 22 of 56.6525 hit on Friday.

It had gained 0.3% to trade at 56.15 versus the euro , after earlier coming within a whisker of a near three-month high, and had shed 0.2% against the yuan to 8.109 .

The rouble's recent strength may seem abnormal, but the Russian currency has several growth drivers, said Alor Broker in a note.

"Dollars are being dumped due to fears of new sanctions being introduced, which will make trading in the U.S. currency in Russia if not impossible, then very difficult and expensive," Alor Broker said.

Another support factor is the month-end tax period that usually sees Russia's exporters convert their foreign currency earnings into roubles to pay to the treasury, the peak of which falls today.

Brent crude oil, a global benchmark for Russia's main export, was down 0.5% at $85.73 a barrel. (Reporting by Alexander Marrow Editing by Kirsten Donovan and Mark Potter)