Bloomberg News

Russia's RTS Index Falls for First Week in 2006, Led by Lukoil

February 03, 2006

Russia's main stock index fell today and capped its first weekly decline in 2006. OAO Lukoil and OAO Surgutneftegaz extended yesterday's losses after oil traded near a three-week low in New York yesterday.

The dollar-denominated Russian Trading System Index slid 2 percent to 1,308.13 in Moscow. The measure has lost 4.7 percent since climbing to a record Jan. 27. The decline was the first weekly drop since December and the steepest since October.

The ruble-denominated Moscow Interbank Currency Exchange, or Micex, fell 2.6 percent to 1,163.75.

Indexes extended declines after a report showed a bigger- than-expected increase in U.S. wages last month, spurring concern that the Federal Reserve will further raise interest rates. Higher rates increase returns on low risk securities, prompting some investors to cut holdings in emerging markets.

A slump in Brazilian stocks yesterday also prompted investors to cut holdings in Russia, said Alexander Pankov, a trader at Antanta Capital brokerage in Moscow.

``Some negative sentiment from other emerging markets, such as Brazil, is causing a feeling we should also follow,'' Pankov said in a telephone interview. ``Oil prices have also stopped gains. The market has climbed quite high and is due for a correction.''

Lukoil, Russia's largest crude oil producer, slipped 2.5 percent to $74.62. Surgutneftegaz, the fourth-biggest, declined 3.2 percent to $1.335. Both stocks rose to records on Jan. 27.

Crude oil fell 2.8 percent yesterday, reaching the lowest since Jan. 13, after the U.S. said it won't immediately seek sanctions against Iran, easing concern the world's fourth-biggest oil producer might retaliate with an export cut.

Gazprom, Norilsk Nickel

OAO Gazprom slipped 1 percent to $7.76, falling for a second session. The world's biggest natural-gas producer said yesterday it's considering a bid for British gas and power supplier Centrica Plc. No talks have been held and no offer has been made, said a Gazprom official in Moscow, who declined to be identified.

OAO GMK Norilsk Nickel, the world's biggest nickel and palladium producer, lost 2.4 percent to $84.90. Nickel for three month settlement slipped for a second day on the London Metal Exchange, shedding 0.3 percent to $15,150 a metric ton.

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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