Bloomberg News

Russian Stocks Pares Weekly Gain as Oil Drops on Iranian Embargo

January 16, 2012

Jan. 13 (Bloomberg) -- Russian stocks pared its third weekly advance as crude dropped to a three-week low after European Union officials said an embargo on Iranian crude imports may be delayed for six months.

The 30-stock Micex Index fell 0.1 percent to 1,463.43 by 6:45 p.m. close in Moscow, paring its weekly gain to 1.6 percent. Oil producer OAO Gazprom Neft fell 2.1 percent while VTB Group, the nation’s biggest lender, rallied 2.2 percent. The dollar-denominated RTS Index dropped 0.8 percent to 1,446.46.

Oil, Russia’s chief export earner, slid 0.6 percent to $98.52 after the officials said that the ban would be postponed to allow countries such as Greece, Italy and Spain find alternative supplies. International Atomic Energy Agency inspectors will go to Tehran this month to discuss Iran’s nuclear program, two diplomats with knowledge of the talks said. Brent oil for February settlement declined 90 cents to $110.36 a barrel.

“There has been a $10 to $15 per barrel premium in the Brent price because of Iran recently,” Chris Weafer, chief strategist at Troika Dialog, wrote in emailed comments. “As that threat eases, the premium is shrinking.”

The Micex, which has rallied 4.4 percent this year, trades at 5.5 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 9.4 times estimated earnings according to data compiled by Bloomberg. The Shanghai Composite Index trades at 9.3 times estimated earnings, and the BSE India Sensitive Index has a ratio of 14.

Russia-focused equity funds attracted $43 million of inflows in the week to Jan. 11, UralSib Financial Corp, said in a report, citing EPFR Global Data. “This is the first week of positive flows week in the last eight,” analyst Slava Smolyaninov said in a report e-mailed today.

--Editors: Alex Nicholson, Hellmuth Tromm

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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