Bloomberg News

Russian Trading System Index Rises, Led by Lukoil

January 31, 2006

(Corrects Gazprom recommendation change in 11th paragraph)

Russia's main stock index rose, paced by OAO Lukoil, the country's biggest oil producer. Record earnings from Exxon Mobil Corp. fueled optimism that oil companies will benefit from higher fuel prices.

OAO Gazprom, the world's largest natural-gas supplier, gained after reporting that profit increased more than some analysts expected. OAO Rostelecom paced declining shares.

The dollar-denominated Russian Trading System Index added 0.1 percent to 1,333.77 at 3:28 p.m. local time, rebounding from a 3 percent decline yesterday. Twelve stocks fell, six rose and 32 were unchanged.

The ruble-denominated Moscow Interbank Currency Exchange, or Micex, gained 0.4 percent to 1,190.80.

Lukoil rose 1.5 percent to $78.40. OAO Surgutneftegaz, Russia's fourth-biggest oil producer, advanced 1.9 percent to $1.418. OAO Tatneft, the No. 6, added 1.4 percent to $4.42.

Exxon Mobil, the world's largest oil company, yesterday said fourth-quarter profit jumped 27 percent to a record $10.7 billion on surging energy prices.

New York crude oil futures rose as much as 0.4 percent to $68.65 a barrel today, close to a four-month high, as OPEC signaled it will keep pumping almost at capacity to build up stockpiles and meet rising demand.

Oil for March delivery recently traded at $68.07 on the New York Mercantile Exchange.

Gazprom Earnings

Russia, the world's second-biggest crude oil exporter and the largest natural-gas producer, relies on oil and gas for more than half of its export revenue. Crude oil has risen 41 percent in the past year.

Gazprom rose 2.1 percent to $7.84, rebounding from a 5.9 percent decline yesterday. Third-quarter net income surged 68 percent to 79.3 billion rubles ($2.8 billion) as gas prices increased, the company said after the market closed yesterday.

Troika Dialog analysts Oleg Maximov and Valery Nesterov today raised Gazprom to ``hold'' from ``sell,'' saying the earnings were better than they expected.

``Gazprom managed to keep core operating expenses in check, beating our estimates,'' the analysts said in a research note. They lifted forecasts for Gazprom's fourth-quarter and 2006 earnings, and increased the price estimate for the shares by 7 percent to $8.40.

Rostelecom, Russia's state-controlled long-distance telephone operator, slid 0.4 percent to $2.275, extending yesterday's 2.4 percent drop. The shares were cut to ``reduce'' from ``hold'' by UBS Securities in Moscow on speculation recent gains overstated the earnings outlook, according to a report from the bank dated Jan. 27.

Rostelecom climbed 14 percent in the three months ended Jan. 27. The analysts maintained a price estimate of $2.10.

Among other stocks in Russia, OAO Sberbank, the country's biggest lender, added 1.3 percent to $1,520. The bank's preferred shares rose 3.5 percent to $28.05.

To contact the reporter on this story: Maria Ermakova in Moscow at mermakova@bloomberg.net.

To contact the editor responsible for this story: Balduin Hesse in London at bhesse2@bloomberg.net.


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