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Russia Stocks Retreat Third Day as Oil Falls on Japan Earthquake

25 Oct 2012

Russian stocks declined for a third day as oil, the country’s main export revenue earner, tumbled after an earthquake struck off the coast of Japan. HSBC Holdings Plc cut the nation’s shares to “neutral” from “overweight.”

The Micex Index dropped 0.7 percent to 1,719.95 by the 6:45 p.m. close in Moscow. Oil producer OAO Gazprom Neft tumbled 3.3 percent. OAO Sberbank, Russia’s biggest lender, dropped 0.9 percent after announcing a deal to acquire the Troika Dialog investment bank. OAO Novatek, the country’s second-largest natural gas producer, lost 2.7 percent. The dollar-denominated RTS Index slipped 1 percent to 1,929.59.

Oil headed for the first weekly decline in a month, following an 8.8-magnitude earthquake off the northern coast of Japan. Crude for April delivery slumped as much as $3.69, or 3.6 percent, to $99.01 a barrel in electronic trading on the New York Mercantile Exchange. Protests are scheduled today in Saudi Arabia, the Middle East’s biggest producer of crude.

“The earthquake in Japan along with the events in the Middle East has caused some selling,” Ovanes Oganisian, a strategist at Renaissance Capital, said by phone today.

Copper for three-month delivery fell 1.5 percent to $9,053 a metric ton on the London Metals Exchange. Nickel, lead, tin and zinc all declined on the LME. OAO GMK Norilsk Nickel, Russia’s biggest mining company, decreased 1.6 percent to 6,769 rubles.

OAO Raspadskaya, a coal producer, dropped to its lowest close since Nov. 30, losing 3.5 percent to 192.4 rubles. The stock declined 6.3 percent yesterday after two people familiar with the matter said that Russian billionaire Roman Abramovichand his partners in steelmaker Evraz Group SA are seeking to sell their stake.

HSBC Cuts Russia

HSBC reduced its rating for Russia because oil prices may fall after Saudi Arabia promised to increase production to compensate for reductions caused by unrest in Libya.

“Oill prices should fall back gradually to where they were before the current Middle-Eastern crisis erupted,” John Lomax and Wietse Nijenhuis wrote in the report e-mailed today. This will be “negative” for Russia, they said.

Russia’s Micex Index fell the most in a month yesterday, declining 2.7 percent to 1,731.80 in Moscow.