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. Last Updated: 07/27/2016

RTS Passes 305 to Reach 4-Year High

The benchmark Russian Trading System index on Friday jumped 5.06 percent on new cash inflow and rising oil prices to close at 305.47, its highest level in nearly four years.

The previous closing high of 310.61 was recorded May 6, 1998, a few months before the financial meltdown, and the index did not begin to push 300 again until last month.

"We've broken the post-crisis high of 301 on higher oil prices, higher bond prices and fresh inflows of funds," said Ari Krel of UFG sales and trading.

"If we get any decent continuation of this move early next week accompanied by good ADR volume, the people on the sidelines will pounce and there's another big fat leg left in this rally," he added.

The Reuters Russian Composite closed 6.74 percent higher at 2,052.45, while the Reuters index of the Moscow Interbank Currency Exchange, dominated by local investors, ended up 6.89 percent at 1,430.05 on trade of 4.7 billion rubles ($151 million).

Volume on the RTS was high at $28.5 million.

No. 2 oil firm Yukos was a major driver behind Friday's rally, still drawing buyers from its well-received quarterly results and ability to control costs compared to its larger rival, LUKoil.

"Yukos was a big driver today, and demand for all shares was coming from across the board," said Nick Mokhoff, a trader at Brunswick UBS Warburg. Yukos closed 6.73 percent higher at $7.290, while LUKoil ended up 4.3 percent at $12.620.

"We had been stuck in a sidewise trend and were counting on getting out of it by going up. Now we're trying again," said Alexei Bystrov, head of trading at Olma Brokerage, referring to short-lived efforts to bid the index back above 300 on Tuesday.

"But this time it's not only Russian money," he added.

Russian bonds provided support, boosted by confirmation that the country has been buying back debt and reducing foreign debt payments due next year.

UFG's Krel also said that positive restructuring stories were pushing the market higher.

Gazprom closed sharply higher after board member Dmitry Medvedev told the Financial Times that rules on trading Gazprom could soon ease and restrictions on foreign trade in local shares.

Restructuring the gas monopoly will be one of the government's most difficult reform tasks in coming years, and moves to liberalize the share market are seen as key to proving company and government goodwill toward investors.

Gazprom shares in Moscow closed up 8.4 percent at 22.45 rubles and gained 9.02 percent in London at $13.90.

Benchmark utility Unified Energy Systems, another state-controlled monopoly, also swept ahead to close 7.67 percent higher at $0.1615.

Restructuring of UES is under way. On Friday, however, the board of directors delayed a key vote on long-sought assurances that minority investors get their fair share of the reformed utilities. The board had been due to rule on a single blueprint for reforming each of UES's 70-plus regional subsidiaries that enshrines the spinoff of power plants from the state-controlled monopoly.