Markets Plunge on Ruble Fears

The country's main stock exchange slammed shut the trading floor doors to halt plunging prices Tuesday, with Russian assets under pressure as the Central Bank ceded ground on the ruble and oil prices fell.

Potash miner Uralkali extended its massive losses as investors feared the company, facing a renewed government probe of a 2006 mine flood, was the subject of an asset grab.

With its main index down 12.6 percent, the MICEX suspended trading for a day, barring an order from the market regulator to restart before Thursday's opening bell.

The Central Bank let the ruble decline to 30.79 against its euro/dollar basket in early trading Tuesday before returning it to about 30.70, around 30 kopeks below its previous support level.

"The biggest question now is what happens next: Whether this is the first of many moves or a stand-alone measure," Renaissance Capital economist Alexei Moiseyev said. "We believe today's move achieves nothing and that the Central Bank should either have held the basket or let it go completely. A 1 percent move will not stop speculation, nor will it help the economy adjust to the much worsened terms of trade," he said.

With oil down more than $3.50 in New York, pressure mounted on Russian asset prices. The benchmark RTS Index fell 10.7 percent to 725.89, its lowest level this month.

Both the MICEX and RTS suspended share trading because of sharply declining prices for one hour in early trading. Sberbank, Norilsk Nickel and Rosneft were all suspended for one hour during the day after declines of 10 percent or more.

Uralkali, which lost 62 percent in London on Monday after the company said a government probe into a mine accident could threaten its existence, lost another 23 percent in London and led losses on the MICEX with a 34.81 percent decline.

"Someone likely wants the company for themselves, goes the whisper," said one Moscow-based hedge fund manager who declined to be identified.