On Friday the US imposed major sanctions against several Russian businessmen and their companies, striking at allies of President Vladimir Putin over Moscow's alleged meddling in the 2016 US election and other "malign activity".

The action caused a hefty sell-off across Russian markets, with the rouble slumping against the dollar to mid-December lows and shares down more than 8 percent to their lowest this year.

"The market reaction reflects rising concerns that foreign investors may find it difficult to invest in Russian assets given the US has imposed this new wave of sanctions against various Russian companies," said Piotr Matys, a strategist at Rabobank.

"The main objective of these sanctions is to curb access to global markets for the affected Russian companies," he added.

The RUSAL Capital bond maturing 2022 fell more than 11 cents at one point to a record low while the 2023 bond fell more than 14 cents to 73.6 cents, also a record low.

Rusal shares fell almost 29 percent on the Moscow exchange with the company assessing the sanctions may result in technical defaults.

The bonds of Russian gold producer Polyus also sold off, while Russian sovereign bonds tumbled across the curve, with the 2043 dollar-denominated eurobond down over 3 cents, according to Tradeweb.

The average yield spread of Russian sovereign bonds over US Treasuries on the JPMorgan EMBI Global Diversified widened by 14 basis points to 1Reuters

Russian five-year credit default swaps rose 6 bps from Friday's close to 127 bps, according to IHS Markit data, the highest since mid-December.

Away from Russia, sentiment for emerging markets remained positive, with MSCI's benchmark emerging stocks index up 0.2 percent. Outperformers included Budapest stocks, which leapt 1.8 percent after Prime Minister Viktor Orban's government was re-elected with a strong mandate in Sunday's election, averting the risk of unpredictable policy changes.

The Hungarian forint also firmed 0.14 percent against the euro and the yield on Hungary's 10-year government bonds dropped 6 basis points to 2.45 percent.

"This positive reaction comes from the fact that investors are generally in favour of political stability," said Matys.

The Turkish lira continued to slide, weakening 0.5 percent to another record low.

At the weekend Turkey criticised the United States for sending what it said were mixed messages over Syria, saying Washington was sowing confusion about its future role in the country. On Monday the Pentagon denied attacking a Syrian air base.