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Micex Gains Most in Week on Rising Crude, China Stimulus Bets

Russian stocks jumped the most in more than a week as oil, the country’s chief export earner, gained and investors bet China will take steps to spur economic growth.

The benchmark Micex Index climbed 1.6 percent to 1,416.50 by the close in Moscow, the most since July 3. The gauge added 0.2 percent in the week. OAO Novatek jumped 6 percent on speculation the Russian natural-gas producer may breach OAO Gazprom’s monopoly on exports. Russia’s biggest coking coal producer OAO Mechel and United Co. Rusal added more than 3 percent.

Emerging-market stocks climbed for the first time in eight days. Crude oil rose 0.9 percent to $86.87 a barrel in New York. Oil and gas contribute about 50 percent of Russia’s state revenue. China’s gross domestic product expanded 7.6 percent last quarter from a year earlier, the slowest pace since 2009, putting pressure on Premier Wen Jiabao to take steps to secure a second-half economic rebound. Russian stocks kept gains after the central bank left interest rates unchanged.

“We see a revival of investor interest for the Russian stock market,” Matthias Siller, who helps manage $4 billion in Europe, Middle East and Africa stocks at Baring Asset Management in London, said in a phone interview today.

Bank Rossii kept the refinancing rate at 8 percent, a quarter-point above the record low, in line with the forecasts in a Bloomberg survey. Russia is the last major emerging economy to keep borrowing costs unchanged this year.

Fund Inflows

“China mends sentiment this morning,” Alexei Zabotkin, an analyst at VTB Capital, said in an e-mailed note. While the GDP data “was broadly expected by the market, it suggests that the state would have to enlarge the scale of the stimulus to curb the negative trend.”

Russia equity funds posted their first week of inflows in 12 in the week ended July 11, attracting $51 million, according to VTB Capital’s report, which cited EPFR Global data.

Standard & Poor’s GSCI Commodity Index rose 0.8 percent to 620.10, a third day of gains.

OAO Rostelecom, Russia’s long-distance phone operator, gained 1.1 percent to 119.28 rubles, the most since July 3. First-quarter profit jumped 38 percent after broadband and paid television subscribers rose, the company said today.

MRSK, RusHydro

OAO MRSK Holding added 0.5 percent to 1.675 rubles after falling as much as 1.9 percent earlier. The government plans to sell one of the units of the country’s largest power distributor to help fund a revamp of the industry as the company merges with national network operator Federal Grid Co., Energy Minister Alexander Novak said late yesterday. Russia may issue new MRSK shares for the sale, Novak said.

Russia approved an asset-sale plan on June 7 targeting revenue of 300 billion rubles ($9.3 billion) this year. The state plans to sell stakes in OAO Sberbank, the country’s largest lender, tanker operator OAO Sovcomflot and fertilizer maker OAO Apatit, Economy Minister Andrei Belousov said at the meeting at the time.

“The big advantage that Russia has is that while other countries have sold their holdings for a significant part, Russia has not, to the same extent,” Baring’s Siller said.

OAO Rosneftegaz, the energy holding run by President Vladimir Putin’s ally Igor Sechin, plans to acquire about 5 percent of hydropower producer OAO RusHydro for cash and stock, Novak said. RusHydro shares added 1.6 percent to 85.86 kopeks.

Russia’s benchmark index, which has added 1 percent this year, trades at 5.2 times estimated earnings. That compares with 9.5 times projected earnings for the average company on the MSCI Emerging Market Index, which has gained 1 percent this year.

Russian equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg.

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