Bloomberg News

Russia Stocks Have Best Weekly Advance in 1 1/2 Years on EU Plan

October 14, 2011

Oct. 14 (Bloomberg) -- Russian stocks had their best weekly gain in more than 1 1/2 years as oil and metals rallied on bets Europe’s debt crisis will be contained. OAO Concern Kalina, a cosmetics maker, jumped to its highest on record.

OAO Gazprom, Russia’s gas export monopoly, rose 2.9 percent. OAO Sberbank, the country’s biggest lender, surged 7.6 percent. Kalina increased 40 percent to the strongest price since its shares started trading in 2004 after Unilever agreed to acquire the company. The 30-stock Micex Index added 3.1 percent to 1,431.92 by the 6:45 p.m. close in Moscow, giving it a weekly gain of 6 percent, the biggest since March 2010.

Oil climbed as much as 3.6 percent, rallying with equity markets as Group of 20 and International Monetary Fund officials said the Washington-based lender may increase resources to help stem the European debt crisis. U.S. retail sales climbed more than forecast last month, data showed today.

“The market is really reassured because it looks they are doing something to address the European debt crisis,” Bruce Bower, a partner at Moscow-based hedge fund Verno Capital, said by phone. “We were falling before because of the fear that nothing was going to be done.”

Russia’s trade with EU countries accounted for $453.6 billion, or almost half of the country’s total foreign trade turnover in January through July 2011, according to Russia’s Federal Service of State Statistics.

Cheapest Stocks

Russian stocks are the cheapest among the so-called BRIC nations, with shares in the Micex trading at an average 5 times analysts’ earnings estimates, compared with a price-to-earnings ratio of 9.6 for stocks in Brazil’s Bovespa index, 11.2 for the Shanghai Composite Index and 14.5 for the BSE India Sensitive Index. The Micex is down 15 percent this year.

Slovakia’s lawmakers backed the European Financial Stability Facility yesterday, after parliament had failed to approve the measures on Oct. 11. The expanded powers of the 440 billion-euro ($600 billion) EFSF would allow the fund to buy the debt of stressed euro-area nations, aid troubled banks in the region and offer credit lines to governments. Russia sells commodities, including natural gas, oil and base metals, to Europe.

Urals crude, Russia’s main export blend, added 0.1 percent to $110.65. OAO Lukoil, Russia’s second-largest oil producer, added 2.5 percent to 1,708.50 rubles.

--Editors: Alex Nicholson, Ana Monteiro

To contact the reporter on this story: Alex Nicholson in Moscow at anicholson6@bloomberg.net

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


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