Bloomberg News

Russia Stocks Rebound as Oil Advances on Iran Disruption Fears

January 16, 2012

Jan. 16 (Bloomberg) -- Russian stocks erased losses, gaining for the first day in four as oil climbed after Iran said that a disruption to crude supplies through the Strait of Hormuz would cause a shock to markets that “no country” could manage.

The 30-stock Micex Index added 0.1 percent to 1,464.42 by the 6:45 p.m. close in Moscow, erasing an earlier loss of as much as 1.2 percent. OAO Lukoil and OAO Rosneft, Russia’s largest oil producers, advanced 1.1 percent and 0.8 percent, respectively. OAO Sberbank, the nation’s biggest lender, rallied 0.3 percent. The dollar-denominated RTS Index rose 0.6 percent to 1,455.32.

Oil futures climbed as much as 1 percent after sliding 2.8 percent last week. Iran has threatened to shut the strait, a transit route for about a fifth of global oil trade, in response to international sanctions on its exports. Any disruption will harm the world’s crude markets, Iran’s governor to OPEC said, according to the state-run Mehr news agency. Nigerian labor unions suspended protests after saying they would consider shutting down oil output in opposition to higher fuel prices.

“The price of Brent is bucking the weaker trend in industrial metals as the continuing uncertainty over events in Iran and Nigeria provides a cushion against the weaker trend that would otherwise take place,” Chris Weafer, chief strategist at Troika Dialog, wrote in e-mailed comments today.

Brent oil for February settlement was at $111.22 a barrel, up 78 cents on the London-based ICE Futures Europe exchange.

‘Political Uncertainty’

Russian stocks earlier fell after Fitch Ratings revised Russia’s credit outlook to stable from positive while affirming the country’s score at BBB.

“Political uncertainty in Russia has risen and the global economic outlook has worsened since Fitch last affirmed the rating in September 2011,” Charles Seville, director in Fitch’s sovereign group, said in a statement.

Prime Minister Vladimir Putin has promised fair presidential elections in March in a bid to head off more demonstrations after at least 30,000 people rallied in Moscow on Dec. 24 over alleged ballot box fraud.

The Micex, which has rallied 4.4 percent this year, trades at 5.4 times analysts’ earnings estimates for member companies, the lowest among the so-called BRIC nations, which include Brazil, India and China. The index dropped 17 percent in 2011, compared with an 18 percent slide for Brazil’s Bovespa index, which trades at 9.6 times estimated earnings according to data compiled by Bloomberg. The Shanghai Composite Index trades at 9 times estimated earnings, and the BSE India Sensitive Index has a ratio of 14.1.

--Editors: Peter Branton, Stephen Kirkland

To contact the reporter on this story: Jason Corcoran in Moscow at jcorcoran13@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net


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