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. Last Updated: 07/27/2016

Shares Recover After Cabinet Shock

News that President Boris Yeltsin sacked his entire Cabinet shook Russian stocks early Monday, dropping the Moscow Times Index about 6 percent in light, speculative trading before regaining ground and closing up about 1 percent for the day.

The Moscow Times Index of 50 leading shares closed at 255.87, up 0.93 percent, despite fluctuations among key blue chips of 10 percent early in the day. Later volumes hit $155.5 million -- the second highest daily volume this year behind $167 million traded March 11.

The RTS 105-stock index started the day almost 4 percent off before rallying to close at 342.85, up 2.1 percent.

Oil stocks jumped on news that Saudi Arabia, Venezuela and Mexico had orchestrated a plan to halt the fall in crude prices. Market giant LUKoil led the way, setting a record volume of $59 million to close at $18.1, up 3.8 percent after having fallen 7 percent in morning trade.

Unified Energy Systems fell 10 percent on Friday's close but revived to close at $0.3265, up a mere 0.15 percent.

Yeltsin's announcement sent shock waves through the market, prompting speculation. Some Russian investors began selling, then changed course when it became clear foreign participants were standing firm, traders said.

Despite the oil agreement and the healthy situation on world markets, traders said the market likely will fluctuate in the coming weeks as the government submits a string of new appointments to the Cabinet.

"For now, the market understands that nothing horrible has happened. There is no scandal," said Andrei Galperin, senior trader at Creditanstalt-Grant. "I think the market will be shaken over the next week or two. Each new appointment will be considered as good or bad news, but there will be no catastrophe."

Fixed-income markets followed equities, with prices initially falling for long-term treasury bills, known as GKOs.

"It was possible to buy [long] GKOs with a yield of 32.5 to 33 percent," said Alexander Romashov, a dealer at ING Bank. But by afternoon the market had gone back up, with long-term yields stabilizing at about 29.5 percent, compared to 27.5 percent Friday. Romashov predicted a further rise in prices Tuesday.

Russian debt traded overseas also dipped in the morning before recovering, with the seventh tranche of MinFin bonds falling to 45.25 from Friday's close of 47.52 before returning to 46.13 when the Russian market closed at 4 p.m.

Russia's other overseas debt, dollar-denominated Vnesh, fell as much as 1 point. By 4 p.m., trade in the country's principle debt had recovered to Friday's level of 64.625 bid.

The ruble fell sharply in morning trade to 6.088 on the Moscow Interbank Currency Exchange compared to 6.0815 Friday. The ruble later rose to 6.083.