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. Last Updated: 07/27/2016

RTS Falls for Fifth Day to Scrape 350

Shares took a battering for the fifth straight session Thursday, unable to resist the downward pull of U.S. markets, with utility Unified Energy Systems again leading losses after the government allowed it only a tiny rate hike.

The benchmark RTS closed off 2.25 percent at 350.15 on a turnover of $29.03 million, while the Reuters index of the ruble-denominated MICEX slid 4.85 percent to 1,427.44 on a turnover of 3.5 billion rubles ($111 million).

"Everyone is on one side. Everyone is selling," the head trader at a Russia-dedicated fund said.

"Correlation used to be low and during that time Russia separated from the rest of the world. But when you have three, four, five days in a row, and [U.S. markets] are falling not 1 but 2 or 3 percent, there is no way Russia can separate itself from the rest of the world," the trader said.

UES -- on a monthlong downward spiral as investors give in to doubts about what they will end up with after a sweeping overhaul of the power sector -- took its steepest drop yet this month.

It fell 5.06 percent to $0.1125, a seven-month low, after the government said it would only raise UES' heavily regulated wholesale tariffs by 2.4 percent, compared with 15 percent for a key supplier, state gas monopoly Gazprom.

"Unified will be squeezed between Gazprom and consumers," the trader said. "[It] will be facing squeezed markets and deteriorating profitability at least for the next year."

Gazprom fell 6.15 percent to 30.50 rubles. The trader said that although the rate hike was positive for the company, the market had hoped for more.

Declines in UES picked up pace earlier this week over concerns that proposed changes to the UES charter would weaken board control over asset transfers.

UES said Wednesday it had met with portfolio investors to explain the charter proposals, which come up for approval at UES' annual meeting on June 28, and smoothed over the spat.

But the trader said it remained a market factor. "I think the market is still pricing this into the stock," he said.

Bob Saharov of NIKoil said the tariff news explained only part of the UES slide.

"It's falling on general uncertainty about where the company is going in the short-term future. People are worried about the restructuring and they are not sure what kind of company people will be owning in the next six months," Saharov said.

The stock was trending downward, with the next support level around $0.10, he said, though some speculators were picking up the stock as it fell.