MOSCOW, May 15 (AFP) - Russian stocks drew a much-needed respite
Friday from the central bank's decision to leave a key interest rate
unchanged, but were still nursing sizeable losses on the day after a
week in which equities shed some 15 percent, traders said.
Stocks lost around two percent Friday, slumping for a fourth
straight day, and bond yields spiked upwards as investors remained
bearish about emerging markets, traders said.
At 6:00 p.m. (1200 GMT) the Russian Trading System (RTS) index
was down some two percent on Thursday's close at 258.10.
Brokers said the central bank's decision to leave its
refinancing rate unchanged gave equities a boost, as stocks had
earlier been more than four percent off.
The bank left the rate at 30 percent, but did hike its Lombard
rate for 3-14 day credits to 36 percent from 30 percent, and the
rate for 15-30 day credits to 40 percent from 36 percent.
"It's a helpful headline, no doubt about that," said Tom
Brackenbury, a trader with the Rinaco Plus brokerage. "It's
obviously designed to act as a no-panic signal, and that's what it
has done."
Stocks have been battered all week by concerns over the unrest
in Indonesia and knock-on effects in Asia, which have triggered
fears of further financial turmoil and sent international investors
fleeing from emerging markets.
The RTS has lost 15 percent in four days of trading this week.
"Emerging markets generally are not performing well, and the
riots in Indonesia don't help," said Gary Kinsey, a trader with the
Brunswick brokerage, adding the market was "very volatile."
"In general there has been no big buyer in the market for a week
or two," he added.
Bond yields meanwhile topped 40 percent, fuelling speculation
that central bank directors would agree to raise the refinancing
rate at a meeting Friday afternoon to protect a weakening ruble and
try to draw investors back to Russia's fixed income market.
"here is no real aggressive demands for GKOs (Treasury bills),
and this is the main reason for the dramatic fall in prices," said
ING Bank trader Maxim Safonov.
He blamed the market nervousness on uncertainty over the
government's open market policies, in particular moves to borrow
less on domestic markets and try to cover the shortfall by
collecting more taxes.
"The overall situation around the world is also not so positive,
particularly when you see reports on CNN from Indonesia," he added,
referring to the unrest which has translated into an abrupt downturn
in emerging markets around the world.
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