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. Last Updated: 07/27/2016

Share Market Retreats As Europe Slams War




Russia's share market slipped Wednesday, unnerved by Europe's reaction to the war in Chechnya, traders said.


The dollar-denominated Moscow Times Index of 50 leading shares fell 0.91 percent to 138.74 on volume of $18.952 million.


The RTS1-Interfax share index dropped 0.80 percent to 182.30 on a thin volume of $17.7 million. The broader Reuters Russian composite slipped 0.22 percent to 1,206.61.


"Fewer and fewer people are bullish about Russia in the short term, and this is pushing some clients to sell," said Aton trader Denis Sarantsev.


A boycott by three parties in the State Duma worried some investors, though two of the three by the end of Wednesday appeared ready to end their protest.


But Sarantsev said European disapproval of Russia's fight in Chechnya was also causing concern.


European Union foreign ministers have authorized the EU's executive commission to carry out mild sanctions against Russia over what the EU sees as disproportionate use of force by the Russian military in Chechnya.


Traders gave mixed opinions of the market's nearest future, saying the trade was highly speculative and foreign investors were on the sidelines.


Oleg Martynenko, head of domestic sales at Alfa Bank, said that since prices had been falling for the last three days operators who had been taking profits had war chests ready to fund a new rise.


"The global problem is that the market has already priced in all the good news, not the bad," he said.


"The market will now follow any news. So far the only possible positive news would be a [restructuring] agreement with the London Club [of private creditors], while the potential for bad news is high."


Russia is in negotiations to restructure $32 billion debt to the London Club, and First Deputy Prime Minister Mikhail Kasyanov said this week he expected the deal by Russia's March 26 presidential election.


Alexander Fonarkov, head of equities at Fleming UCB, said the market would slip further in the next few days.


"I see local and Western sales," he said.


"I think the Russian demand will support the market for one more day, maybe taking it a bit higher. But the market will ease within the next week, although on low volumes. We can see now that interest for Russia has cooled off."


National power grid Unified Energy Systems, which led the market by turnover, lost 1.01 percent to $0.1406.


Leading oil company LUKoil dropped 0.83 percent to $11.90, while another oil company, Surgutneftegaz, was 3.02 percent lower at $0.257.