Miners Fall, Recover in London Trading

APThe MICEX exchange building. Halted trading on the MICEX did not stop Russian shares from dropping in London.
Falling demand for metals and forced investor selling sheared off as much as one-third of steelmaker Severstal's value Monday in London trading before a rally late in the day.

The FTSE Russia IOB Index fell nearly 13 percent on Monday, before recovering to close down 1.8 percent.

Falling prices for industrial metals accelerated losses as panic selling spread through emerging market stocks.

"Russia and metal stocks are toxic," a trader at a major Western bank said.

By early afternoon, Severstal shares were down 37.46 percent, closely followed by other steel firms. The company had a strong finish, however, and closed the day up 11 percent.

Investors, fearful of Russian risk, dumped stocks in London while Moscow exchanges remained shut following a limit-down suspension. Unless the regulator issues special orders, local exchanges cannot open until Tuesday.

Repeated stock market suspensions, lasting from an hour to more than a day, have added to investors' misgivings about Russia, at best forcing them to shift trading to London and at worst leaving them in the dark about the value of their assets.

Many industrial metals fell to multiyear lows on the London Metals Exchange. Copper led falling commodity prices with a decline of five percent.

Traders said investors were ignoring news that Severstal had successfully renegotiated the purchase price of U.S. acquisition PBS Coals, as well as a steep target price downgrade from JPMorgan, which cut Severstal to $5.30 from $22.

Investment funds were selling Severstal to raise cash as investors pulled out of the market, another trader said.

"There are three sellers, and each of them has to sell, regardless of the price," a trader at a Russian brokerage said. "Margin calls can happen anywhere, but these look more like redemptions."