MOSCOW, March 24 (Reuters) - The Russian rouble

strengthened on Monday as U.S. and Russian officials began talks

in Saudi Arabia aimed at making progress towards a broad

ceasefire in Ukraine.

By 0930 GMT, the rouble was up 1% at 83.60 against the

dollar in the over-the-counter market. The rouble underwent a

correction last week, losing about 4% against the dollar in two

days, but has still gained more than 26% this year.

The rouble's rally since the start of the year has been

fuelled by expectations of a peace settlement in Ukraine and

easing of tensions between Russia and the United States.

A high key interest rate, which the central bank kept on

hold last Friday, is also supporting the rouble.

Against the Chinese yuan, the most traded foreign currency

in Russia, the rouble was up 0.5% at 11.41 on the Moscow Stock

Exchange.

"This week, we allow for the possibility of a new wave of

strengthening of the rouble. By Tuesday, another round of

positive geopolitical news is not excluded," said Denis Popov

from PSB bank.

(Reporting by Gleb Bryanski

Editing by Ros Russell)