Bloomberg News

Russian Energy Stocks Decline; Norilsk Nickel Shares Advance

August 28, 2006

Russian energy stocks fell after oil prices declined for the first time in three days in New York. OAO Lukoil, the country's largest producer of the fuel, and OAO Tatneft paced the drop.

OAO GMK Norilsk Nickel, Russia's biggest mining company, rose as copper futures advanced in Shanghai.

The dollar-denominated Russian Trading System Index closed little changed at 1643.17 in Moscow. The ruble-priced Micex Index slipped 0.4 percent to 1450.58.

Oil for October settlement dropped 2.6 percent to $70.60 a barrel on the New York Mercantile Exchange, as Tropical Storm Ernesto veered away from platforms in the Gulf of Mexico that were damaged by Hurricane Katrina last year.

Lukoil lost 1.1 percent to $85.80. OAO Tatneft, Russia's No. 6 oil company by output, fell 3.4 percent to 144.27 rubles ($5.39) on the Micex Stock Exchange.

Separately, Tatneft's rating was withdrawn by Standard & Poor's because of a lack of information about the company's finances, the rating agency said Aug. 25.

The Almetyevsk, central Russia-based company's B- long- term corporate credit rating, which is six steps below investment grade, was withdrawn after it was placed on CreditWatch with negative implications, S&P said.

Norilsk Nickel, the world's biggest nickel and palladium producer, rose 1.9 percent to $136, rebounding from a 4 percent drop in the previous two sessions.

Copper in Shanghai rose for the first time in four days on speculation labor unrest in Chile may spread beyond BHP Billiton's Escondida mine, further disrupting global supplies. The London Metal Exchange is closed today for a holiday.

Metals Prices

Investors increased holdings of Norilsk as they expect analysts to increase forecasts for earnings after gains in copper and nickel prices this year, said Vladimir Bril, the head of equities at MDM Bank in Moscow.

Nickel prices have more than doubled since Jan. 1 on the LME and touched a record $29,950 a ton on Aug. 22. The price of copper, which generates about a fifth of Norilsk's revenue, is up 72 percent this year.

RBC Information Systems advanced 1.3 percent to 214.56 rubles. The media and Internet company was given a ``buy'' recommendation by Aton Capital Group in Moscow, which reinstated coverage of the stock.

``RBC is one of the key beneficiaries of the domestic consumption boom through explosive growth of Russia's advertising market,'' Nadezhda Golubeva, an analyst at Aton, wrote in a report today.

OAO Moscow Regional Electricity Grid Co., which distributes power in the Moscow region, gained 4 percent to a record 1.574 rubles.

Earnings Growth

The shares of the company that was set up last year as part of the breakup of Moscow utility OAO Mosenergo, are attractive because of prospects for earnings growth, said Vladimir Yermolaev, vice president for equity trading at Centreinvest Securities in Moscow.

OAO Mosenergosbyt gained 3.6 percent to 32.1 kopeks on Micex. The company, which was also spun off last from Mosenergo, supplies heat and power to Moscow customers.

Share trading today was slow because the U.K. stock market, Europe's biggest, was closed for a holiday and as some Russian investors took summer vacations.

Trading on the Russian Trading System's so-called classical market, the main stock platform, amounted to $17.1 million today, compared with the $59 million average daily volume in May, according to data compiled by Bloomberg.

To contact the reporter on this story: Maria Ermakova in Moscow at

To contact the editor responsible for this story: Balduin Hesse in London at

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