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. Last Updated: 07/27/2016

RTS Drops Back Below 300 But Seen as Steady in Future

Foreign sellers emerged in a few Russian shares Wednesday, a day after the key index hit a 44-month high, unnerving some traders, but others said sellers were ill-advised to bet on further losses.

The key RTS index closed off 1.82 percent at 295.96 on turnover of $20.45 million after a few hours above 300 in the afternoon.

The Reuters Russian Composite lost 1.73 percent to 2,017.62 and the Reuters index of the ruble-based Moscow Interbank Currency Exchange lost 2.24 percent to 1,421.14 on trade of 4.21 billion rubles (137 million).

"Everything that happened today was an effort by brokers to drag the market up so they could sell higher," said NIKoil head of trading Andrei Kukk, who said foreign investors had been selling after a weak close in the United States and continued selling into Wednesday's close in Moscow. "It worked for some."

Kukk saw foreign investors selling Surgutneftegaz and Unified Energy Systems and said sales could intensify throughout the market unless there was improvement in U.S. markets, but he said losses would be no more than 5 percent.

Surgutneftegaz lost 4.84 percent on the RTS to $0.3340, while UES fell 1.38 percent to $0.1717.

LUKoil gave up slight midafternoon gains to close off 0.64 percent at $15.45.

Tom Brackenbury of CentreInvest, however, said he saw the market driven by healthy Russian fundamentals and warned against inclinations to short the market.

"It's come down a small amount in small volume so there is no particular technical significance [to Wednesday's slip]," Brackenbury said. "I don't see any particular stocks being dumped at all."

Traders said that in the near future the RTS would likely rotate around 300, which it had last seen in the months preceding the 1998 financial crisis.

"Everyone expected 300 would be a strong level, and we should trade around it until we go further," a Western bank trader said.