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. Last Updated: 07/27/2016

RTS Leaps To a New 2001 High

The benchmark Russian Trading System index jumped 5.61 percent to a new 2001 closing high of 236.53 Tuesday due to what dealers described as increasing confidence in the country's economic development.

The previous 2001 closing high of 227.87 was reached on June 22. The market is up more than 80 percent since the start of the year. Turnover on the RTS was $24.7 million.

The broader Reuters Russian composite also surged, closing up 8.08 percent at 1,556.83, while the Moscow Interbank Currency Exchange, or MICEX, dominated by local investors, closed 9.3 percent higher at 1,115.80.

Surgutneftegas was up 9.51 percent to $0.2902, and Rostelecom rose 9.61 percent to $0.7870.

"Russia has been getting increasingly good press for the last year and the accepted wisdom has now shifted to the view that Russia is our friend and ally," said NIKoil chief strategist Eric Kraus.

"This is a real rally because it's real money, a lot of it coming from U.S. fund managers," he added.

Russian shares had been poised to hit new highs on Monday until a New York plane crash rattled global nerves. They immediately resumed their climb when trade opened Tuesday with markets believing the crash had been an accident.

"At the minute, you have to look at the fact that there are only two success stories in the world, Russia and China. Russia is cheap and China is expensive," Kraus said.

Crude prices were still struggling Tuesday, languishing around $7 below pre-Sept. 11 attack levels despite the expectation that the Organization of the Petroleum Exporting Countries will decide to cut production by 1.5 million tons at its meeting in Vienna on Wednesday.

Dealers said oil prices, which normally drag Russian stocks in their wake, were only encouraging investors to look at other Russian companies.

"Importantly, we are seeing interest in even second-tier utilities now," a dealer at a Russian bank said. "The perception of risk has changed and people are seeking out anything that is cheap."