Russia’s Micex Index Slides to Week-Low; Rosneft Shares Retreat

Russian stocks fell, pushing the benchmark gauge to its lowest level in a week as investors bet previous gains were overdone and the nation’s biggest oil producer tumbled for a fourth day.

The 30-stock Micex Index (INDEXCF) dropped 0.9 percent to 1,541.64 by the close in Moscow, its weakest since Feb. 2 after sliding as much as 1.4 percent. OAO Rosneft (ROSN), the country’s largest oil company, sank 2.2 percent after banks including Goldman Sachs Group Inc. and Deutsche Bank AG cut their recommendations. The dollar-denominated RTS Index dropped 0.3 percent to 1,638.09.

Russian stocks pared losses after European Central Bank President Mario Draghi said Greek party leaders had reached an agreement on austerity measures needed to obtain a bailout. The Micex climbed to its strongest level in six months on Feb. 2 as Urals crude, Russia’s main export oil blend, topped $114 a barrel.

“Russia has looked stretched on technicals for a few sessions now so the temptation to book some profits is almost irresistible,” Julian Rimmer, a trader of Russian shares at CF Global Trading in London, said in an e-mail. “Greece has been a fly in the ointment for several days, but unless negotiations are aborted completely then as an issue it’s not capable of derailing equity markets in isolation.”

The Micex is up 10 percent this year and trades at 5.7 times analysts’ earnings estimates for member companies.

The gauge retreated 17 percent in 2011, compared with an 18 percent drop for Brazil’s Bovespa index, which is valued at 10.5 times estimated earnings according to data compiled by Bloomberg. The Shanghai Composite Index trades at 9.7 times estimated earnings, and the BSE India Sensitive Index has a ratio of 15.8.

Rosneft, VTB Fall

Rosneft had its longest losing streak since October after Goldman cut the state-run company to “neutral” from “buy,” citing weak free cash flow and increasing capital expenditures in a note today. The stock was cut to “hold” from “buy” at Troika, Deutsche Bank and UBS AG earlier this week.

Shares of VTB Group, Russia’s second-biggest lender, slid 1.4 percent to 6.896 kopeks, a two-week low. Starting next month, the bank will buy back shares from investors who participated in the lender’s 2007 initial public offering at the IPO price of 13.6 kopeks a share, Prime Minister Vladimir Putin said today.

“We didn’t force the bank to do this,” he said. “This really was the management’s independent decision.”

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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