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. Last Updated: 07/27/2016

Explosion Doesn't Deter Good Economic News

Russian shares closed firmer Wednesday, as nerves calmed following a deadly bomb blast in central Moscow and investors turned their attention once more to an economy glowing with health, traders said.

The dollar-denominated Moscow Times Index of 50 leading stocks rose 1.17 percent to 168.38 on turnover of $34.63 million.

The RTS1-Interfax, the main over-the-counter index, which dipped in early trade amid worries about a possible new terrorist campaign, closed up 2.06 percent at 217.38 on volume of $28.98 million.

The broader Reuters Russian composite was 0.87 percent higher at 2,133.66.

Steven Dashevesky, chief equity analyst at Aton investment house, said most of the market impact of the explosion was felt in foreign trading of Russian American Depositary Receipts, which fell in nervous trading.

But by Wednesday morning, traders were looking again at the country’s sound economic fundamentals, reflected later in the day in Finance Ministry projections for a balanced budget with a primary surplus next year.

"The overall mood is that things like that [the bomb blast] happen and may have a near-term impact, but longer term, it doesn’t change anything," Dashevsky said.

"The market did open a bit lower, but there seems to be very strong institutional demand from London, and that continues to support the market on every dip," he added.

Andrei Galperin of IK Prospekt said the market was at a crossroads. "On the one hand, everyone has been waiting for a [downward] correction, and the blast could serve as a catalyst, but on the other hand, cash, especially Western cash, is providing support."

The Vienna stock exchange’s Russian Traded Index of blue chip stocks was up 0.86 percent at 501.71 in the mid-afternoon, while the Reuters Russian ADR index was up 3.93 percent at 171.23.

Dashevsky said the economy continued to derive strength from high oil prices feeding into various other sectors.

"There’s a lot of good news coming in from all kinds of different places, and eventually it had to be reflected in the share price," he said.

He believed the market would end this week higher, although buying was moderate so far. "But after that I think we’re going to go through a period of consolidation," he said.

National power utility Unified Energy Systems closed 0.71 percent higher at $0.1565, while Mosenergo utility had added 3 percent to $0.0481.

Oil major LUKoil gained 0.52 percent to $15.33. Telecoms firm Rostelekom was unchanged at $2.6250.