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Russia Stocks Rise 1st Time in 3 Days as Utilities, Rosneft Gain

Nov. 22 (Bloomberg) -- Russian stocks climbed for the first time in three days, extending their weekly increase, as power shares rose.

The Micex Index added 0.7 percent to 1,504.10 by the close in Moscow, bringing the advance this week to 0.7 percent. Utilities, including OAO RusHydro, gained. Russian lawmakers voted in the last two of three readings to end state-controlled OAO Gazprom’s monopoly on exports of liquefied natural gas, which once signed into law will allow OAO Novatek and OAO Rosneft to ship tankers of the fuel to foreign markets.

The benchmark index pared its steepest slump in a week yesterday as the Federal Reserve signaled it may reduce stimulus in coming weeks. Russia-dedicated equity funds had $130 million in outflows in the week ended Nov. 20, the fourth week of redemptions, UralSib Capital said in an e-mailed note today.

Following a “correction yesterday, the market is bouncing back up,” Sergey Kucherenko, who manages about $50 million in Russian equities at OAO Nomos Bank in Moscow, said by phone.

Rosneft, Russia’s biggest oil producer, jumped 1.8 percent, the most since Oct. 31, to 246.80 rubles in Moscow. The stock climbed 1.9 percent at 3:54 p.m. in London. Novatek, the nation’s second-biggest natural gas producer, increased as much as 0.6 percent before closing 1.6 percent lower at 402 rubles, trimming an advance this year to 16 percent. The London-traded stock added 0.3 percent to $134.60 in the U.K. capital.

Gazprom Shorts

Novatek “has been well-discounted and outperformed in advance accordingly,” Julian Rimmer, a trader at CF Global Trading UK Ltd., said by e-mail from London. “People are covering Gazprom shorts and then reducing Novatek longs.”

United Co. Rusal increased 2 percent to 92 rubles, while OAO Magnitogorsk Iron & Steel rose 1.1 percent to 7.955 rubles.

OAO Novorossiysk Commercial Sea Port, a state-controlled oil producer, dropped 4.3 percent to 3.021 rubles, the lowest since Aug. 19. The nation’s stake in the port could be sold to a strategic investor, Interfax reported, citing Economy Minister Alexei Ulyukayev. Rosneft is seeking President Vladimir Putin’s backing to buy Russia’s 20 percent of the largest port operator in the country.

The RTS Index gained 1.3 percent to 1,444.91. Russia’s equities have the cheapest valuations among 21 emerging economies monitored by Bloomberg, with shares on the Micex trading at 4.3 times projected 12-month earnings, compared with a multiple of 10.5 for the MSCI Emerging Markets Index.

“Next year the market will take until March to decide whether to rally or to drop; we’ll see fluctuations before that,” Nomos Bank’s Kucherenko said.

Sberbank CIB set its 2014 estimate for the RTS at 1,500, implying a 3.8 percent advance from today’s close. The bank’s analysts, including Moscow-based Kingsmill Bond, cited their forecast for brent oil next year at $95 to $115 a barrel, with reform initiatives remaining limited, according to the e-mailed note dated today.

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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