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. Last Updated: 07/27/2016

Dealers Brace for Tuesday Trading

Stocks recouped most of their earlier losses Monday after the U.S. Federal Reserve cut interest rates to close down about 1 percent on lukewarm demand.

But traders warned that any fallout from the reopening of the New York Stock Exchange for the first time since last Tuesday's terrorist attacks would be felt in full force Tuesday.

The RTS Index closed 1.09 percent down at 189.93 on turnover of $15.5 million. Earlier, shares had slipped about 5 percent.

"There is no panic on the market, but it is very sensitive to the news," said Jacques Polier, head of sales and equity at Troika Dialog.

Russian trading overlapped with New York trading for 30 minutes. The initial bloodshed seen in New York did little to move the Russian market. U.S. stocks had plummeted 7.5 percent by midafternoon New York time.

Traders said the U.S. Fed's announcement that it was cutting short-term interest rates from 3.5 percent to 3 percent an hour before U.S. markets opened was not unexpected and had served to shore up Russian stocks.

"Such a decision showed the nervousness of financial authorities and political pressure," said Alexei Kazakov, senior analyst at NIKoil.

Traders also applauded a decision by the European Central Bank to reduce its interest rate late Monday -- after the Russian market had closed -- from 4.25 percent to 3.75 percent in a move to match the U.S. interest cut.

"It's a good cut. It'll prolong the agony of the markets' contraction," said Sam Barden, a trader at Renaissance Capital.

Since the terrorist attacks last week, the RTS has shed more than 9 percent.

Still, market players said they remain confident that Russia will be able to weather any fallout from the West.

"We believe the Russian market is somewhat insulated against world markets due to its strong economy, strong growth and the simple fact that Russia is, and has been all year, fundamentally very cheap," said Barden.