Bloomberg News

Russia Stocks Retreat Most in 2 Months on Oil’s Drop, Goldman

April 19, 2010

Russian stocks fell the most in more than two months as oil and metals slumped on concern a fraud probe against Goldman Sachs Group Inc. may widen, curbing appetite for riskier assets and commodities.

VTB Group, the country’s second-biggest lender, lost the most since November, while state pipeline operator OAO Transneft slipped 3.8 percent. The 30-stock Micex Index closed 2.4 percent lower at 1,459.17 in Moscow, its steepest drop since Feb. 8. The decline pared the Micex’s gain this month to 0.6 percent.

Crude oil slid as much as 3.3 percent to $80.53 a barrel after U.K. Prime Minister Gordon Brown called yesterday for the country’s financial regulator to investigate Goldman after the U.S. Securities and Exchange Commission launched a suit against the company related to collateralized debt obligations. The SEC action prompted concern the fallout from the global financial crisis isn’t over. Air-traffic disruptions caused by Iceland’s volcanic eruption cut demand for jet fuel.

“It’s the Goldman effect and commodities are also down,” Elena Suslova, portfolio manager at Wermuth Asset Management, which manages about $400 million in Russia and Eastern Europe, said by phone. “This correction started last week and may have further to travel. Russia has attracted a lot of money this year, but new triggers are fast fading.”

Risk

The MSCI Emerging Markets Index slid 2.3 percent as of the close of markets in Russia. Copper fell to a three-week low, while other industrial metals also declined. The premium investors demand to buy 10-year Greek government debt over benchmark German bunds rose to the most since before the euro’s debut after the travel disruption caused by Iceland’s volcano delayed talks to help resolve the country’s debt crisis.

“Whenever you feel risk is increasing, Russia will be hammered,” Peter Westin, chief strategist at Aton Capital, said in an interview today. “If Goldman is sued, if Greece defaults, you can be sure Russia will be affected and more so than most places.”

Stocks in Russia, the world’s biggest energy supplier, advanced 8.8 percent in March as commodities rallied on evidence a global recovery is gathering pace.

To contact the reporter on this story: Jason Corcoran at Jcorcoran13@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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