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. Last Updated: 07/27/2016

RTS Index Closes at 4-Year High

The benchmark RTS index closed at a four-year high of 357.79 on Tuesday as blue-chip oil stocks drew in U.S. buyers against a backdrop of volatile oil prices and Middle East tension, traders said.

The oil-heavy RTS was 3.28 percent up on the previous day's close on volume of $31 million. It was the highest close since 372.46 in January 1998, seven months before a financial crisis that felled the ruble.

"There were people who wanted to participate in the market and they were waiting for a signal -- oil prices were the catalyst," said Oleg Martynenko, head of domestic trading at Alfa Bank in Moscow.

The Reuters index of the ruble-denominated Moscow Interbank Currency Exchange ended up 3.7 percent at 1,608.26 on turnover of 4.5 billion rubles ($144 million).

Oil prices had soared Monday after Iraqi President Saddam Hussein announced a one-month oil supply halt to protest Israel's incursion into Palestinian areas of the West Bank. But they cooled Tuesday after Israel withdrew from two West Bank cities.

"You cannot say the index is only higher on higher oil prices," said Martin Diggle, a director at Brunswick UBS Warburg. "It is more the fact that we have seen new inflows of money from new institutional buyers."

Most U.S. buyers concentrated on Russia's two biggest oil producers, LUKoil and Yukos, in afternoon trade.

LUKoil closed 3.45 percent higher at $14.980, while Yukos ended up 4.57 percent at $8.920. No. 5 producer Sibneft also drew attention, closing up 4.66 percent at $1.6750.

Martynenko said he expected oil stocks to be the first to be sold if investors chose to cash in profits.

"This oil price spike will probably be short-lived because it could fall when the situation in the Middle East becomes clearer," he said.

"But that gap could be filled if there is positive news on the Russian economy," he said, adding that that would push investors toward utilities and second-tier stocks.

Bellwether utility Unified Energy Systems closed 3.92 percent higher at $0.1590.