Russia Stocks Climb to 8-Month High as China Boosts Oil, Rosneft

Russian stocks rose to the highest level since February, erasing this week’s declines, as China’s accelerating economy boosted commodity producers and crude oil.

The benchmark Micex Index jumped 1.4 percent at 1,533.35 by the close in Moscow, a 1.3 percent gain in the week and a 19.6 percent advance from this year’s June low. OAO Rosneft, the nation’s biggest oil producer, climbed 1.7 percent to 261.40 rubles, the most since Sept. 16. OAO Sberbank, the country’s largest lender, added 1.9 percent to 105.35 rubles, the highest since May 23.

Crude, Russia’s main export earner, increased 0.4 percent in New York after falling 1.6 percent yesterday. China’s economy expanded 7.8 percent in the third quarter, government data showed today, matching the median estimate in a Bloomberg News survey of economists and halting a two-quarter slowdown. The Micex has advanced 4.8 percent this month on optimism a U.S. debt-ceiling deal would be struck.

“The oil price is the main thing for Russia,” Victor Bark, who oversees about $2.8 billion as the head of asset management at Alfa Capital in Moscow, said by phone. “The dependency of our economy on oil is only growing.”

Russia-dedicated equity funds saw $52 million in outflows in the week ended Oct. 16 compared with inflows of $4 million the week earlier, UralSib Capital said in an e-mailed note, citing EPFR Global data.

‘Hollywood Ending’

President Barack Obama signed into law a measure ending the 16-day government shutdown and extending the nation’s borrowing authority until early next year.

“We saw a real Hollywood ending, everyone was happy,” Bark said, referring to the U.S. deal. “Ninety percent of the market had expected the government to find a resolution.”

Rosneft pared gains in Moscow after Fitch Ratings lowered the company’s long-term issuer default ratings to BBB-, the lowest investment grade, from BBB on concern debt will rise through 2017. Rosneft increased 1.6 percent to $8.145 in London, while Sberbank also added 1.6 percent to $13.16.

Most metals gained in London, including nickel. Standard & Poor’s GSCI Index climbed 0.4 percent. OAO Magnitogorsk Iron & Steel jumped 1.3 percent to 8.352 rubles in Moscow, rising 1.3 percent to $3.393 in London. OAO Novolipetsk Steel increased 0.9 percent to 56.82 rubles and rose 1.1 percent to $17.90 in London.

The RTS Index gained 1.7 percent to 1,516.62. The dollar-denominated gauge rose 20 percent from this year’s low to enter a bull market on Oct. 10.

Polymetal International Plc, the Russian gold and silver miner part-owned by billionaire Alexander Nesis, jumped 7 percent to 309.18 rubles, the biggest advance on the Micex. Polymetal was raised to neutral at Bank of America Merrill Lynch today. The company said yesterday third-quarter gold output rose 30 percent on progress at its Amursk pressure oxidation plant.

Russian equities have the cheapest valuations among 21 emerging economies monitored by Bloomberg, with shares on the index trading at 4.5 times projected 12-month earnings, compared with a multiple of 10.8 for the MSCI Emerging Markets Index. Ten-day price swings on the Micex rose to 16.289, the highest since Sept. 25, from 15.169 yesterday.

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