Markets Slump 2% On Mechel

Russian stocks fell for a fifth day, sending the MICEX Index to its lowest level since November 2006, after Prime Minister Vladimir Putin said Mechel minimized its taxes.

Arkady Dvorkovich, President Dmitry Medvedev's top economic aide, said Monday that the country's stocks were "greatly undervalued."

He added that "the pace of economic growth shows that there are no fundamental reasons for serious concerns about the development of the market."

Mechel, controlled by billionaire Igor Zyuzin, plummeted 34 percent. Norilsk Nickel, the country's largest mining company, slumped 7.7 percent, the most in six months.

The ruble-denominated MICEX lost 2.1 percent to 1,456.16, after earlier rallying as much as 1.9 percent. The dollar-denominated RTS Index sank 1.2 percent to 1,928.74, its lowest point since February.

"The market will be depressed until the dust has settled," said Alexander Zakharov, co-head of equities at Metropol, an investment bank based in Moscow.

LUKoil dropped 3.6 percent to 1,880.22 rubles. Rosneft advanced four rubles, or 1.8 percent, to 232.20 rubles, its first gain in seven days.