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. Last Updated: 07/27/2016

RTS Stalls But Good Times Seen Ahead

Shares ended only slightly higher Friday as a weeks-long rally finally petered out, but traders said the market still enjoyed underlying support that could set it rising again in the near future.

The benchmark RTS index rose 1.49 percent to 290.86 on modest turnover of $16.15 million, while the broader Reuters Russian Composite added 1.23 percent to 1993.19.

The Reuters index of the ruble-based Moscow Interbank Currency Exchange, dominated by local investors, was up 1.35 percent at 1412.63 on 2.8 billion rubles in trade.

"Things have slowed down because people are trying to decide what to do next. The market has enjoyed a good run and with a little prompting could go further before its exhausts its immediate prospects," said a Western trader.

Market participants said much of the volume was just brokers trading among themselves. The Western trader saw limited Western client cash as some people engaged in profit taking and others picked up shares where recent gains have been more restrained.

Traders said some Western clients were diversifying their portfolios, switching out of the more liquid oil shares into more diverse paper such as telecoms or preferred shares.

The diversity meant a number of less liquid paper was among the top movers on the RTS, both in volume and price moves.

St. Petersburg Telecom was among the top gainers, but on very tiny volume, closing up 8.7 percent at $0.50.

Preferred shares in long distance provider Rostelecom added 3.46 percent to end at $0.5380 on slightly better turnover.

"Today has been the quietest day since the beginning of the year. Maybe people are beginning to consider what is cheap and what is expensive, because up until now the market has been like a thing possessed," said Aton trader Dennis Sarantsev.

Demand lingers for oil paper with Yukos up 6.03 percent to $5.98 and Sibneft up 2.68 percent at $0.8625. Tatneft preferreds added 1.01 percent to $0.40. Its common stock dipped 0.86 percent to $0.5750.

A Russian trader said investors were closely eyeing Western markets for clues about what to expect in Russia.

"With fourth quarter [2001] earnings due to come out in a few weeks some in the market are expecting development in global sentiment that could have a big impact on our market," he said.

"It is wait and see now. I think we are unlikely to see any big moves in trade unless there is unexpected news. ... Once the market has had a chance to pause for breath there is plenty of basis to add on to what has already been good growth."