Stocks Reach New Highs On Upbeat Expectations

Russian shares closed at fresh 1999 highs Monday as investor expectations of strong growth early next year kept the market active despite the holiday season.

The dollar-denominated Moscow Times Index of 50 leading shares rose 4.56 percent to 120.05 on turnover of $16.737 million.

The benchmark RTS1-Interfax shares index closed up 3.92 percent at 156.61, its highest since the weeks before Russia's financial crisis in August 1998.

Turnover on the main Russian Trading System market was a very healthy $14 million and traders said it could have been higher were it not for public holidays in several key markets.

"I didn't expect this kind of activity today," said Dmitry Kulyashenets, a trader at Renaissance Capital.

"There is of course Russian demand, but despite the fact London markets were closed today there was also certainly foreign demand," he said.

The Reuters Russian Composite was 5.17 percent firmer at 955.06, also a fresh high and the second in two days.

Many Western countries are observing Monday as a public holiday as Christmas fell on a Saturday.

"It's the same story as last week - investors are doing as much as they can before the Russian market closes to celebrate the New Year," said a trader at one Western brokerage.

He said the market's performance over the last two weeks had convinced many investors to put more cash into Russian equities before prices climb as expected early next year but that finding sellers was getting difficult.

Traders have said investor optimism following the results of the Dec. 19 parliamentary election may keep the market more active over the holidays than usual. However, skeptics have warned the market could slip after the election euphoria fades.

Traders said low liquidity would make the market volatile and some foresaw problems with settlement in rubles around New Year as the majority of Russian banks would be closed from Dec. 28 through Jan. 4.

National power grid UES rose 4.57 percent to close at a fresh high of 9.62 cents and Russia's leading oil producer LUKoil was 2.83 percent firmer at $11.26.

Utility Mosenergo firmed 2.23 percent to close 3.67 cents - after hitting an earlier high.

Surgutneftegaz oil tacked on 2.83 percent to close at a new high of 29.75 cents.