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Russia Stocks Drop on Magnit Checks as Norilsk Falls on Output

Russian equities dropped as OAO Magnit tumbled on concern the nation’s biggest food retailer may be forced to close stores in Moscow.

The benchmark Micex Index lost 0.3 percent to 1,398.30 by the close after a 1.3 percent decline last week. Magnit fell 2.2 percent to 8,018.10 rubles and slid 2.3 percent to $58.55 in London. OAO GMK Norilsk Nickel, the world’s biggest producer of the metal, sank 1.5 percent to 4,541 rubles.

Magnit retreated as much as 3 percent after Moscow Mayor Sergei Sobyanin called for health inspectors, police and the migration service to check the company’s 43 stores in the capital and “take measures to close them,” according to the administration’s website and confirmed by the city government’s spokeswoman Gulnara Penkova. Nickel output in the second quarter fell 5 percent from a quarter earlier, Norilsk said today.

“The market doesn’t like probes,” Ivan Kushch, an analyst at VTB Capital in Moscow, said by phone. “Although there would be little financial impact for Magnit from the Moscow store closures, this creates negative sentiment.”

A Magnit spokesman, who asked not to be identified, citing company policy, declined to comment on the report. The company is the best performer on the Micex with a 66 percent gain this year and has the fourth-biggest weighting at 6.1 percent.

OAO Uralkali, the world’s largest potash producer, slumped 1.2 percent to 187.17 rubles.

Billionaire Sells

Billionaire Alexander Nesis sold shares in Uralkali on July 26 two weeks after the company bought out fellow shareholder Zelimkhan Mutsoev for $1.3 billion. The shares were sold “in several small stakes on and off the market, with buyers representing several portfolio investors,” Uralkali said in a statement.

The dollar-denominated RTS Index sank 0.5 percent to 1,344.72. Russia’s equities trade at the cheapest valuations based on estimated earnings among 21 emerging economies tracked by Bloomberg.

Russia’s economy grew 1.6 percent in the first three months, spurring calls for easing. Bank Rossii kept its main lending rates unchanged for a 10th month as policy makers wait for inflation to drop within the target range of 5 percent to 6 percent.

Volume Drops

The volume of shares traded on the Micex was 49 percent below the 30-day average, data compiled by Bloomberg show, while 10-day price swings fell to 12.08. The 50-member Micex’s 5.2 percent decline in 2013 compares with a 0.9 percent increase for India’s benchmark Sensex Index and a 19 percent loss for Brazil’s Ibovespa Index.

The 14-day relative strength index on the Micex subsided to 56.6 from 58.6 on July 26. The RSI measures how rapidly prices have advanced or dropped during a specified time period. Readings below 30 indicate a security may be poised to rise, while those above 70 signal a potential drop.

The Russian Volatility Index, which measures expected swings in RTS futures, surged 8.9 percent, the first advance after six days of declines. The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. decreased 0.8 percent to 90.46, the fourth day of declines.

The Micex trades at 5.3 times its 12-month estimated earnings, compared with a multiple of 10 for the MSCI Emerging Markets Index.

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