Markets Up On China Hopes, Oil

Russian markets and commodity prices climbed on Monday after China announced a $586 billion stimulus package and financial leaders from the G20 declared that they would act "urgently" to combat the economic slowdown.

The dollar-denominated RTS Index and ruble-denominated MICEX Index closed up 7 percent and 2 percent, respectively.

The rally was led by energy stocks, which surged as crude for December delivery traded up about 5 percent Monday evening. Rosneft finished up 6 percent on the MICEX, trailed slightly by Gazprom, which gained 5 percent.

The day's other big winner was Sberbank, which rose 8 percent after Friday's 7 percent climb.

Investors attributed the increase in commodities prices to news that China would spend the $586 billion by 2010 on infrastructure and other projects, boosting demand for raw materials and energy in the world's fourth-largest economy.

"The floor for commodity prices is always going to be supportive of large infrastructure rollouts," said John Heisel, equity sales trader for Citigroup.

Thomas Mundy, an equity strategist at Renaissance Capital, said the G20 call for governments to raise spending and cut interest rates as well as President-elect Barack Obama's firm support for government assistance to the U.S. auto industry also had a hand in the stock market's gains.

"These three reference points show that there are large public-sector investments on the horizon that require steel and demand fuel, and this, of course, is good for Russia," Mundy said.

Yaroslav Lissovolik, head of equity research at Deutsche Bank in Moscow, said gains in Russian energy stocks correlated strongly with China's promise of domestic investment.

"Fuel prices hinge crucially on the state of the Chinese economy, and if they say the Chinese economy is going to do well because of the stimulus package, then one of the main beneficiaries of this is Russia, its oil and gas production," he said.