Bloomberg News

Russia Stocks Rise Third Day as GDP Growth Offsets Europe Woes

November 25, 2011

Nov. 24 (Bloomberg) -- Russian stocks rose for a third day after the economy grew faster than expected in October and oil prices increased, trumping concern that Europe’s debt crisis will spread.

The Micex Index of 30 stocks advanced 0.4 percent to this week’s high of 1,410.36 at 10:22 a.m. in Moscow. The dollar- measured RTS Index was little changed at 1,421.53.

The Economy Ministry said yesterday that gross domestic product expanded 5.6 percent in October from a year earlier, a “surprisingly” strong number that should boost investor sentiment and take the pressure off the central bank to cut rates, said Natalia Orlova and Dmitry Dolgin, analysts at Alfa Bank in Moscow, in a research note. GDP advanced 0.9 percent on the month, the biggest monthly gain of the year.

Crude oil, Russia’s biggest export, climbed in New York as declining stockpiles in the U.S. outweighed Europe’s worsening debt crisis. Crude for January delivery rose as much as 50 cents to $96.67 a barrel in electronic trading on the New York Mercantile Exchange. It was at $96.63 at 9:25 p.m. Moscow time.

OAO Magnit, Russia’s biggest food retailer by market value, led gains, rising as much as 2.5 percent to 2,886 rubles. Rival X5 Retail Group NV, which trades in London, plans to open all of its stores around the clock to meet sales targets and close the valuation gap with Magnit, Kommersant reported today.

Mechel, Novatek, Gazprom

OAO Mechel, the country’s largest coking coal producer, rose 1.9 percent to 305 rubles. Kuzbass Fuel Co., a supplier of coal to power stations, reported earlier today that third- quarter net income more than doubled to 449 million rubles ($14.3 million) on increased domestic demand.

The latest GDP data “underpins our positive outlook” for the fourth quarter, said Slava Smolyaninov and Leonid Slipchenko, analysts at UralSib Capital in Moscow. “The Russian market has been particularly resilient to the recent sell-off, and it is very tempting to attribute this to the country’s strong economic fundamentals.”

OAO Novatek, the Russian natural-gas producer partly owned by Total SA of France, gained 0.8 percent to 393.24 rubles. Domestic Russian gas prices are higher than the U.S., the first time that has happened for more than just a few days, said Kingsmill Bond, chief strategist at Citigroup Inc. in Russia, in a research note.

Novatek shareholder and bigger rival OAO Gazprom increased as much as 0.9 percent to 169.68 rubles, valuing the supplier of a quarter of Europe’s gas at about $127 billion.

--With assistance from Scott Rose, Denis Maternovsky and Jason Corcoran in Moscow. Editors: Paul Abelsky.

To contact the reporters on this story: Brad Cook in Moscow at bcook7@bloomberg.net;

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


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