Bloomberg News

Russian Stocks Rise for 1st Day in 5; Sberbank, Gazprom Gain

July 19, 2006

Russia's RTS stock index rose for the first day in five after Federal Reserve Chairman Ben S. Bernanke eased concerns that the U.S. central bank will keep raising interest rates.

OAO Sberbank and OAO Gazprom paced the advance. Prospects for higher rates make potential returns from riskier emerging- market assets less attractive, and weighed on Russian stocks in the last quarter.

``Bernanke toned down the rhetoric and rate hikes look like they may pause,'' said Alexander Pitaleff, a stock trader at Moscow-based Alfa Bank in New York.

The dollar-based Russian Trading System Index rose 1.8 percent to 1481 in Moscow, reversing a decline after Bernanke began speaking to the Senate Banking Committee. The ruble- denominated Micex Index added 2.8 percent to 1332.11.

Bernanke said ``moderation'' is now under way and policy must take past rate moves into account. The Fed has lifted its key rate 17 straight times to keep inflation in check.

Sberbank, Russia's largest lender, added 3.6 percent to $1,700. Gazprom, the nation's largest company by market value, rose 3 percent to $10.04.

OAO Rosneft, the state-run oil company that raised $10.4 billion in Russia's biggest stock sale, climbed after a U.K. court rejected a request by OAO Yukos Oil Co. to stop Rosneft's listing in London. Rosneft shares advanced 2 percent to $7.54 in London, where it began trading on July 14.

The High Court in London yesterday declined to allow Yukos to pursue a claim that Rosneft's listing would violate anti- money laundering laws and wasn't properly reviewed by U.K. regulators. Yukos says its main asset, OAO Yuganskneftegaz, was unlawfully seized by the Russian government and sold to Rosneft for a fraction of its value.

Yukos shares fell 2.7 percent to $1.07 on the RTS.

TNK-BP Drops

Shares of OAO TNK-BP, BP Plc's Russian venture, fell 1.7 percent to $2.68 after the Natural Resources Ministry said the company may lose some of its operating licenses as the number of idle oil wells it has exceeds Russian law.

TNK-BP is aware of the problem and is seeking to restore output at some wells, company spokeswoman Marina Dracheva said today by phone from Moscow. Only about 7 percent of TNK-BP trades on the open market.

``If it is part of a more serious run on TNK-BP, it is of course concerning,'' said Anders Ronnebaek, who manages Russian and east European assets at Sydbank A/S in Aabenraa, Denmark. ``For now, I don't think it's a big issue.''

To contact the reporter on this story: Svenja O'Donnell in Moscow at sodonnell@bloomberg.net.

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


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