Russian stocks fell the most in three weeks as the dollar strengthened sending oil, Russia’s chief export, and metal prices lower.
The 30-stock Micex Index fell 2 percent to 1,360.48 led by declines in OAO Lukoil, the Russian oil company with the most assets abroad, OAO Rosneft, Russia’s largest oil producer and Russian gas exporter OAO Gazprom.
“There is considerable concern that further dollar strength could trigger a wider correction in industrial metals and energy,” said Eric Kraus, head of strategy at Otkritie Financial Co. in Moscow.
OAO Lukoil lost 3.3 percent to 1,655.9 rubles after crude oil fell for the first time in three days as the dollar strengthened against the euro, limiting the appeal of commodities as a currency hedge. OAO Rosneft declined 3.2 percent to 253.54 rubles.
The dollar rose to the highest level against the euro in three months as declines in stocks stoked demand for the currency as a refuge. The dollar also advanced after the Federal Reserve said yesterday that deterioration in the labor market is “abating” while reiterating it will keep its target rate at virtually zero for an “extended period.”
“Even though the Fed kept interest rates unchanged they did admit things are stabilizing in the U.S. economy,” said Andrey Kryuchenkov, a VTB Capital analyst in London. “Sentiment in the dollar is turning positive.”
OAO GMK Norilsk Nickel (GMKN), Russia’s biggest mining company, fell 2.1 percent to 4,201.4 rubles after copper prices in London tumbled by the most in a week. Copper futures for March delivery dropped 6 cents, or 1.9 percent, to $3.1455 a pound at 8:10 a.m. on the New York Mercantile Exchange’s Comex division.
OAO Sberbank, Russia’s largest lender, fell 1.1 percent to 81.14 rubles, heading for its biggest decline in three weeks. A weaker ruble may encourage Russians to withdraw or convert local-currency deposits, Sberbank’s main means of funding.
VTB Group OJSC, Russia’s second-largest bank, lost 2.7 percent to 6.76 kopeks after the company said its third-quarter net loss almost doubled as it set aside more cash to cover bad loans.
Losses related to VTB’s restructured loans “appeared” to have risen considerably in the third quarter, Nomura Holdings Inc. said in a note to clients today. “Some of the rescheduled loans may still turn out to be non-performing but today VTB doesn’t treat them as part of non-performing loans and no provisions are set aside for them,” wrote Maciej Szczesny, an analyst at Nomura in London. “For us this means that loan loss charges at VTB are likely.”