Russia’s Micex Index Rallies Before ECB Meeting; Oil Gains

Russian stocks surged as investors awaited a policy announcement by the European Central Bank after the U.S. Federal Reserve refrained from more economic stimulus.

The Micex Index (INDEXCF) added 0.8 percent to 1,423.06 by 2:36 p.m. in Moscow after sliding as much as 0.4 percent earlier. OAO Magnit, Russia’s biggest food retailer, gained 3 percent and OAO RusHydro added 4.5 percent. OAO Rosneft, the country’s biggest oil producer, slumped as much as 1.4 percent after posting a second-quarter net income loss. OAO Mechel (MTLR), Russia’s largest coking coal producer, surged 3.1 percent, extending its 6.6 percent gain yesterday.

The ECB is due to announce a policy decision today following President Mario Draghi’s pledge last week to do “whatever it takes” to keep the euro together. Fed Chairman Ben S. Bernanke held off on stepping up record stimulus even as economic growth slowed.

“Whether the ECB will be able to act effectively and decisively and put itself ahead of the curve of economic deceleration is the big question at this point,” Slava Smolyaninov, an analyst at Uralsib Capital, said in an e-mailed research note. “It appears that markets believe some kind of loosening is on the way and they may be seriously disappointed if hawks win this time.”

Crude oil, Russia’s chief export earner, fell as much as 0.4 percent, before trading up 0.4 percent at $89.12 in New York. Oil and gas contribute about 50 percent of the nation’s state revenue.

The dollar-denominated RTS Index (RTSI$) rose 0.8 percent to 1,385.87.

The Micex trades at 5.2 times estimated earnings, having gained 1.6 percent this year. That compares with a multiple of 9.7 times for companies in the MSCI Emerging Markets Index, which has added 3.6 percent this year.

Russian equities have the lowest valuations based on estimated earnings among 21 emerging markets tracked by Bloomberg.

To contact the reporter on this story: Ksenia Galouchko in Moscow at kgalouchko1@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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