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Russia Stocks Trim Worst Quarterly Slump in Year on Crude Oil

Russian equities rose, paring the worst quarterly drop in a year, as crude oil increased on signs of economic recovery in the U.S.

The 50-stock Micex Index (INDEXCF) added 1.2 percent to 1,328.84 by 11:42 a.m. in Moscow, reducing its retreat in the quarter to 7.6 percent, the biggest loss since the period ended June 2012. The Russian Volatility Index (RTSI$), which measures expected swings in RTS futures, declined 6.2 percent, dropping for a fourth day.

Crude futures added 0.6 percent to $97.61 in New York, a fifth day of advances, as signs of economic recovery in the U.S. boosted the demand outlook in the world’s largest oil consumer. Russian stocks slumped this quarter and the dollar-denominated RTS Index entered a bear market on June 5 amid concern the U.S. Federal Reserve will taper stimulus. The Standard & Poor’s GSCI Commodities (SPGSCI) Index headed for a 5.7 percent quarterly drop. Russia is the world’s biggest energy exporter.

“It has been a tough quarter, the market got hit by the drop in credit liquidity in the developed markets and a drop in demand for commodities in the developing world,” Aleksei Belkin, who helps manage about $6.8 billion in assets as chief investment officer at Kapital Asset Management LLC in Moscow, said by phone. “Commodities slumped, people panicked and ran for cash.”

Russian equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg. The nation’s economy grew 1.6 percent in the first three months, the slowest pace since 2009. Bank Rossii held its refinancing rate at 8.25 percent on June 10 after inflation accelerated for a second month in May to the fastest pace in 21 months.

Fund Outflows

Russia-dedicated funds lost $285 million in the week ended June 26, the fifth week of outflows, according to a UralSib Capital e-mailed note, citing EPFR Global data.

OAO Mechel (MTLR), Russia’s biggest coking-coal producer, increased 0.7 percent to 96 rubles, paring a 38 percent drop in the quarter, the second-biggest after OAO Raspadskaya.

The Micex slumped on June 20 after U.S. Federal Reserve Chairman Ben S. Bernanke said the regulator will probably taper its bond buying later in 2013 and halt purchases around mid-2014 if the world’s largest economy performs in line with projections.

Brent oil rose 0.2 percent to $103.02 a barrel in London, a fifth day of gains. China’s CSI 300 Index (SHSZ300) is down 12 percent this quarter on concern higher money-money rates will increase funding costs for banks.

Price Swings

Out of 50 stocks, 44 increased and 6 dropped on the Micex. The volume of shares traded on the gauge was 32 percent below the 30-day average, while 10-day price swings dropped to 18.431.

Four stocks on the Micex closed yesterday at a 52-week low and none at a high, according to data compiled by Bloomberg. Twenty-three stocks, or 46 percent, were trading above their 50-day moving average.

The Micex trades at 5 times its 12-month estimated earnings, having lost about 10 percent this year, compared with a multiple of 9.8 for the MSCI Emerging Markets Index, which is down 12 percent. The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. climbed 0.9 percent to 83.66 yesterday.

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

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

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