Bloomberg News

Russian Stocks Fall for First Day in Four as Crude Oil Declines

August 31, 2010

Russian stocks slumped for the first time in four days as oil, the country’s biggest export earner, fell and crude producer OAO Lukoil (LKOH) reported earnings that missed analyst estimates.

The 30-stock Micex Index (INDEXCF) fell 1 percent at 12:33 p.m. in Moscow to 1,357.50, erasing the gain in the previous two days. The dollar-measured RTS Index slid 1.4 percent to 1,407.27.

Lukoil, Russia’s largest oil company after state-run OAO Rosneft, decreased 1 percent to 1,640.44 rubles. The company said second-quarter net income declined 16 percent to $1.95 billion as costs rose faster than oil prices. That missed the median estimate of $2.05 billion in a survey of five analysts.

“Costs, including purchased oil and taxes, increased dramatically against the same period the previous year,” Pavel Sorokin, an oil and gas analyst at Alfa Bank in Moscow, said by telephone from Moscow.

Oil, Russia’s main export, dropped as much as 1.7 percent to $73.42 per barrel for October delivery in electronic trading on the New York Mercantile Exchange. Russia’s government based this year’s federal budget on $75 oil.

OAO Gazprom, the world’s biggest natural gas company, declined 1.4 percent to 156.92 rubles. OAO Tatneft, the oil producer controlled by the Tatarstan regional government, fell 1.5 percent to 139.70 rubles.

Rates, Inflation

The central bank left its main interest rates unchanged as policy makers said inflation pressures triggered by the worst drought in at least 50 years can’t be stemmed by monetary policy moves. Bank Rossii kept the refinancing rate at a record low 7.75 percent, a decision that was expected by all 13 economists in a Bloomberg survey. The regulator last cut rates May 31.

OAO Sberbank, the biggest lender in eastern Europe, slid 1.3 percent to 76.30 rubles, valuing the company at about $53.4 billion. Smaller competitor VTB Group fell 1 percent to 7.88 kopeks, reducing its market value to about $27 billion.

“Food prices are likely to be in focus over the next few months, as the extent of the damage to crops from drought is revealed,” Anna Zadornova, a London-based economist at Goldman Sachs Group Inc., said in a research note before the central bank’s meeting today.

OAO Razgulay Group (GRAZ), the country’s largest listed grain and sugar producer, declined 2 percent to 45.75 rubles.

To contact the reporter on this story: Brad Cook in Moscow at Bcook7@bloomberg.net

To contact the editor responsible for this story: Hellmuth Tromm in Berlin at htromm@bloomberg.net


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