Russian Stocks Rise to Highest in Three Weeks After ECB Rate Cut

Russian stocks rose to the highest level in three weeks as the European Central Bank’s decision to cut interest rates to a record low signaled increased demand for assets that offer a higher yield.

The Micex Index (INDEXCF) rose 1.1 percent to 1,392.03 by 11 a.m. in Moscow, the highest on an intraday basis since since April 12. The ruble gained less than 0.1 percent against Bank Rossii’s target basket of dollars and euros to 35.4859. It added 0.2 percent against the dollar to 31.1255, appreciating for the first time in three days.

European policy makers cut the main refinancing rate to a record-low 0.5 percent yesterday, and the Federal Reserve Open Market Committee said in a statement on May 1 it is “prepared to increase or reduce” asset purchases to spur the U.S. economy. Russian utilities and financials were among the biggest gainers on the benchmark gauge, advancing at least 0.9 percent. Brent crude oil jumped 2.9 percent yesterday, the most since Oct. 4, and traded 0.2 percent lower at $102.63 per barrel today in London trading.

“The ECB rate cut, and dovish policy outlook from the FOMC not only reinforces the demand for yield, but will lend support to commodity prices, supportive of the ruble,” Tradition UK analysts said in an e-mailed note.

Federal Grid Co., Russia’s power transmission monopoly, rose 1.2 percent to 13.42 kopeks after surging 10 percent yesterday, extending its advance this week to 21 percent. OAO Sberbank added 0.8 percent, increasing for a third day. Shares traded for Federal Grid was 65 percent of its three-month daily average volume and for Sberbank 13 percent, according to data compiled by Bloomberg.

Tradition UK said it expected minimum trading activity in today’s session. The Moscow Exchange was closed on May 1 for a public holiday and most businesses in Russia are shut through May 3.

To contact the reporter on this story: Vladimir Kuznetsov in Moscow at vkuznetsov2@bloomberg.net

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net

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