Most Russia Stocks Fall as China Concern Offsets Draghi Optimism

Most Russian stocks declined as Chinese inflation accelerated more than expected last month, offsetting investor optimism after European Central Bank President Mario Draghi said the euro-area economy will recover.

The 50-stock Micex Index fluctuated, falling less than 0.1 percent to 1,506.20 by 11:37 a.m. in Moscow, trimming its weekly gain to 2.1 percent. Thirty-one stocks fell and 18 rose. OAO GMK Norilsk Nickel lost 1.3 percent and OAO Novatek, Russia’s second-biggest gas producer, dropped 0.9 percent, while coalminer OAO Raspadskaya rose 3.4 percent.

China’s inflation accelerated faster than estimated, limiting room for easing. The euro-area economy will return to health in 2013, Draghi said yesterday, and Japan today announced a 10.3 trillion-yen ($116 billion) stimulus package.

“Draghi’s remarks had a positive bias,” Peter Szopo, head of research at Alfa Bank, wrote in an e-mailed report. “Japan’s prime minister announced $116 billion in stimulus, but higher- than-expected Chinese inflation data are weighing on markets.”

Oil, Russia’s main export revenue earner, was little changed, after gaining 72 cents yesterday to an almost four- month high of $93.82 a barrel in New York. Saudi Arabia, the world’s largest crude exporter, reduced output in December to the lowest in 19 months, according to a Persian Gulf official with knowledge of the kingdom’s energy policy.

The Market Vectors Russia ETF (RSX), the largest dedicated Russian exchange-traded fund, increased 0.8 percent to $30.05, gaining for the first time in four days. The RTS Volatility Index, which measures expected swings in the stock futures, rose 1 percent to 20.97.

The Micex trades at about 5.4 times estimated earnings. That compares with a multiple of 10.8 times for the MSCI Emerging Markets Index.

Russian (INDEXCF) equities have the lowest valuations based on estimated earnings among 21 emerging markets tracked by Bloomberg. Russia receives about half of its budget revenue from oil and natural gas industry sales.

-- Editors: Torrey Clark, Alex Nicholson

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