LONDON- Morgan Stanley reduced its exposure to Russian stocks while buying dollar-rouble and the country's five-year credit default swaps (CDS), citing uncertainties over future sanctions.

"In Moscow we found the sentiment overshadowed by sanctions uncertainty and the authorities' contingency plans," analysts at Morgan Stanley wrote in a note to clients.

"We turn cautious on Russia fixed income, shifting credit, rates and FX to a dislike. We recommend buying Russia 5-year CDS, targeting 170bp, and buying USDRUB, targeting 68.5."

The rouble RUB= last traded at 65.748 to the dollar compared to 57.658 at the start of the year while Russian equities have scaled a record high last week.

Morgan Stanley added it had also increased its overweight on Saudi Arabian stocks ahead of inclusion of some of its stocks in key benchmarks by index providers MSCI and FTSE.

(Reporting by Karin Strohecker, editing by Mike Dolan) ((karin.strohecker@thomsonreuters.com; +442075427262; Reuters Messaging: karin.strohecker.reuters.com@reuters.net))