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Russia RTS Index Futures Fall as U.S. Stocks Drop, Dollar Gains

May 16 (Bloomberg) -- Russia’s RTS stock-index futures declined, signaling stocks may drop in Moscow today, as U.S. equities tumbled amid concern Europe’s debt crisis will worsen and economic growth will fall short of forecasts.

Futures on the dollar-denominated index expiring in June retreated 1 percent on May 13. Contracts on OAO Rosneft, the country’s biggest oil producer, sank 0.6 percent while those on OAO Lukoil, Russia’s second-biggest, fell 0.7 percent. OAO Gazprom, the world’s biggest gas producer, fell 0.9 percent.

Investors bought the dollar and U.S. Treasuries as they sought to reduce risk before the weekend, “suggesting a negative outlook for Russian equities into early next week,” Paul Biszko, an emerging-market strategist at Royal Bank of Canada in Toronto, said via e-mail.

The U.S. currency and Treasuries rallied as investors sold the euro. The European Commission, the International Monetary Fund and the German government back an extension of maturities on Greek bonds because of the worsening deficit situation in Greece, Die Welt reported, while the European Central Bank and France still oppose a so-called haircut.

The Standard & Poor’s 500 Index slid 0.8 percent in New York. The Dollar Index, which tracks the currency against six major peers, rallied 0.8 percent to a one-month high of 75.811.

The Thomson Reuters/Jefferies CRB Index of 19 raw materials fell as much as 0.8 percent before recovering most of the losses by 4 p.m. in New York on May 13.

Energy Exports

Russia is the world’s largest energy exporter and a producer of metals including nickel, palladium and aluminum. Oil and natural gas account for a quarter of economic output.

“With global investment conditions far too uncertain, and sentiment far too fragile, most investors will also remain fearful and with little incentive to do anything other than continue sitting on the fence, observing and waiting,” Chris Weafer, chief strategist at UralSib Financial Corp., said in an e-mailed report May 13 about the Russian equities market.

The Market Vectors Russia ETF, a U.S.-traded fund that holds Russian shares, fell 1.9 percent. Lukoil’s American depositary receipts fell 1.7 percent. Gazprom’s ADRs fell 1 percent. OAO GMK Norilsk Nickel’s ADRs fell 3.4 percent.

Emerging markets funds attracted $253 million in investments in the week to May 11, compared with $1.2 billion a week before and $11.1 billion received last month, Weafer said in the report, citing EPFR Global data.

“With the level of market volatility and general weakness seen last week, any new investment was a surprisingly good outcome,” Weafer said in the report. “It shows that investors are still looking past the current global uncertainties and are still betting on higher returns from emerging markets assets for 2011.”

Investors withdrew $71 million from Russia funds in the week to May 11, the second week of redemptions from Russia funds this year, Weafer said. A total invested in Russia funds was at $4.5 billion as of May 11, he said, citing EPFR Global.

Russia’s ruble-denominated Micex Index rose 0.1 percent to 1,632.23 in Moscow on May 13. The dollar-denominated RTS Index rose 0.1 percent to 1,866.30.

To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net

To contact the editors responsible for this story: Gavin Serkin at gserkin@bloomberg.net; David Papadopoulos at papadopoulos@bloomberg.net

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