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Russia Stocks Drop First Day in Four as Grids Sink; Dixy Jumps

May 7 (Bloomberg) -- Russian stocks sank for the first time in four days as utilities led the benchmark gauge lower on concern the government will curb prices to stoke growth. OAO Dixy Group, a retailer, jumped the most in four months.

The Micex Index traded down 0.3 percent at 1,426.30 as of 2:08 p.m. in Moscow, after gaining as much as 0.4 percent earlier. Federal Grid Co., Russia’s power transmission monopoly, tumbled 2.9 percent to 12.553 kopeks. OAO Russian Grids, formerly known as MRSK Holding, dropped 2.3 percent to 1.339 rubles. The number of shares traded on the Micex was 5 percent above its 30-day average, data compiled by Bloomberg show.

The government will review the power grids’ pricing system at a meeting May 13 headed by Prime Minister Dmitry Medvedev, Kommersant reported today. The Economy Ministry is seeking a 6 percent increase in power tariffs for grid companies for 2014-2015 compared with 9 percent to 10 percent planned earlier, Interfax reported April 25. Crude, Russia’s main export, lost 0.2% to $95.45 a barrel in New York.

“People anticipate a new wave of pressure on power prices,” Mikhail Rasstrigin, an analyst at VTB Capital, said by phone from Moscow. “Investors don’t like all these discussions nor do they like the companies saying they need more money for investment.”

Consumer prices jumped 7.2 percent from a year earlier after a 7 percent advance in March, the Federal Statistics Service in Moscow said yesterday. The economy grew 2.1 percent in the last three months of 2012 from a year earlier, the slowest rate since a 2009 contraction.

Retailer Boost

Russian equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg. The Micex trades at 5.4 times 12-month estimated earnings and has lost 3.3 percent this year, compared with 11 times for the MSCI Emerging Markets Index, which has climbed 0.4 percent in the period.

The Micex climbed earlier after OAO Magnit, the nation’s biggest food retailer by revenue, posted a 33 percent surge in April sales.

Magnit added as much as 1.6 percent before trading down 0.2 percent at 6,991.30 rubles. Dixy Group jumped 6 percent to 449.70 rubles, climbing for a third day.

“Magnit is a sort of read-across for peers,” Natalia Kolupaeva, an analyst at ZAO Raiffeisenbank, said by phone from Moscow. The results show “there is no slowdown in consumption,” she said.

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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