Bloomberg News

Russian Stocks Decline as Aeroflot Slumps on Royalties Report

December 24, 2009

Russia’s benchmark stock index fell for a second time this week, led by OAO Aeroflot as the country’s largest airline headed for its biggest drop in a month.

The 30-stock Micex (INDEXCF) Index slipped 0.6 percent to 1,358.29 at 1:24 p.m. in Moscow as 24 stocks retreated and six increased.

Aeroflot slid as much as 5.3 percent to 49.61 rubles before trading at 50.40 ruble after the Vedomosti newspaper reported the airline may give up revenue it receives from international carriers that fly over Russian territory, a legacy from the Soviet Union.

The carrier said the government can use the $116 million in fees expected to be collected next year to help develop the industry, according to the report, which cited company documents. Aeroflot gained 9.1 percent yesterday, after reporting on Dec. 22 that nine-month profit rose 21 percent.

“Domestic investors will be the dominant market drivers through this holiday season with little external influence” until next week, Chris Weafer, chief strategist at UralSib Financial Corp., wrote in an e-mailed note.

OAO Mobile TeleSystems rose as much as 0.9 percent to 225.35 and last traded up 0.3 percent at 224.16 rubles. Russia’s largest mobile-phone company increased its stake in OAO Comstar United TeleSystems by 11 percentage points to 62 percent, Comstar said late yesterday. The deal is “positive” for both companies, Victor Klimovich, an analyst with VTB Capital, said in a note.

“With this deal we also see greater chances that MTS will go on with consolidation of the 100 percent stake in Comstar UTS,” Klimovich said.

OAO GMK Norilsk Nickel, Russia’s largest mining company, rose 0.6 percent to 4,251.15 rubles. Copper for three-month delivery added 1.7 percent to $7,116.75 a metric ton on the London Metals Exchange. Nickel gained 1.7 percent to $18,750 a ton in a shortened trading day.

To contact the reporter on this story: Mark Sweetman in Moscow

To contact the editor responsible for this story: Guy Collins in London

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