Russian Stocks Traded in Europe Rise as Medvedev Gives Pledge

By Maria Ermakova

Sept. 18 (Bloomberg) -- Russian equities traded in Europe rose, led by OAO Gazprom and OAO Lukoil, after President Dmitry Medvedev said the government will allocate 500 billion rubles ($20 billion) to support the stock market.

Trading in Moscow, which was suspended at midday yesterday, will resume tomorrow, Finance Minister Alexei Kudrin said.

Gazprom gained 8.7 percent in London and Lukoil jumped 7.2 percent after the government also said it will cut the oil export tax, which may boost the earnings outlook for energy companies.

The FTSE Russia IOB Index, a measure of Russian global depositary receipts trading in London, climbed 8.4 percent to 756.33 at 12:39 p.m. in the U.K.

Yesterday, Russia reduced reserve requirements for banks and the Finance Ministry pledged to lend 1.13 trillion rubles ($44 billion) to the country's three largest banks to boost liquidity.

The injection ``of extra liquidity and drop in major reserve requirements for banks by 4 percentage points should undo much of the damage caused by the liquidity squeeze on Monday and Tuesday,'' Chris Weafer, chief strategist at UralSib Financial Corp. in Moscow, wrote in a note to clients.

The Micex Stock Exchange, the country's largest bourse by volume, today resumed limited trading after regulators shut it amid the biggest stock rout in a decade. The ruble-denominated Micex Index plunged 17 percent on Sept. 16, the biggest drop since Bloomberg started tracking the gauge in May 2001, hurt by a liquidity squeeze in the country. The gauge was down 3.1 percent at the time trading was halted yesterday.

`Normal Functioning'

Investors today will be allowed to close repurchase deals on the Micex from Sept. 16 and Sept. 17, said Micex spokesman Alexei Gerasyuk.

Russia ``is taking measures to guarantee the normal functioning of financial institutions,'' Medvedev said at a meeting in the Kremlin today with central bank Chairman Sergey Ignatiev and Kudrin. Medvedev didn't give details of how the money will be spent.

Gazprom, the state-controlled gas export monopoly, jumped 8.7 percent to $28 in London. OAO Norilsk Nickel, the country's largest mining company, advanced 12 percent to $12.35.

Some investors may have bought Russian depositary receipts after stocks plunged this week, said Jochen Wermuth of Wermuth Asset Management. ``There are such ridiculous prices thrown at you in the market every day that it's funny,'' Wermuth said at an investor conference in Geneva. ``At the end of the day, you should be able to make money.''

OAO Lukoil, Russia's second-biggest oil producer, gained 7.2 percent to $56.80 in London. OAO Rosneft, the country's largest oil company, surged 23 percent to $5.79.

Sberbank Gains

Russia plans to slash the crude oil export tax by a quarter to free $5.5 billion for producers, Kudrin said today. The government intends to reduce the tax to $372 a metric ton from Oct. 1, Kudrin said at the meeting in the Kremlin. The duty is currently $495.90 a ton and the Finance Ministry said this month that it would be reduced by 2 percent from Oct. 1.

OAO Sberbank, Russia's biggest bank, climbed 15 percent to 142.50 euros in Frankfurt. VTB Group, the second-biggest bank, jumped 17 percent to $3.45 in London.

The Mosprime rate, a measure of overnight interbank lending rates in Russia, today retreated 3 percentage points to 8.1 percent from a record high, the biggest one-day drop on record.

To contact the reporter on this story: Maria Ermakova in Moscow at mermakova@bloomberg.net.