Russia Shares 2nd Day Fall, Lukoil Retreats

Big 5

Russian shares headed for the biggest drop in a week after oil prices slid to the lowest level this year. OAO Lukoil (LKOD:IX), the country’s biggest non-state crude producer, led declines on the benchmark stock gauge.

The 30-shares Micex Index (INDEXCF) sank 1.2 percent to 1,375.13 by 10:41 a.m. in Moscow, a second day of losses. Lukoil, which has the largest weighting in the index, slumped 3.8 percent after the register for shareholders to receive a 75 ruble ($2.48) dividend closed yesterday.

OAO Rostelecom (ROSYY), the nation’s dominant fixed- line phone operator, fell 1.4 percent. Federal Grid Co. (FEES:RU) rose 0.5 percent after OAO MRSK Holding confirmed reports that it will be managed by Russia’s power transmission network.

Russia-focused equity funds recorded this year’s biggest outflows in the week ended May 9, posting redemption of $188 million, according to EPFR Global. Oil, Russia’s main export earner, fell 1 percent to $96.13 a barrel in New York yesterday, the lowest settlement since Dec. 19.

“The Russian market is pressured by the decline in oil prices,” Mark Rubinstein, head of research at IFC Metropol, said by phone from Moscow. ‘We’re seeing risk aversion, investors are leaving the emerging markets. It’s unlikely that the Russian market will rise next week, most likely will be flat.’’

China’s industrial output rose 9.3 percent in April from a year earlier, the statistics bureau reported yesterday. That missed a 12.2 percent median estimate in a Bloomberg News survey of 32 economists. Most metals fell on the London Metal Exchange.

Russia, the world’s biggest energy exporter and the largest producer of nickel, received almost 50 percent of budget revenue from oil and gas sales last year, according to government estimates. Brent oil for June settlement slipped 47 cents, or 0.4 percent, to end the session at $112.26 a barrel on the London-based ICE Futures Europe exchange.

Trading volumes on the Micex slumped 30 percent in April from the month before compared with a 22 percent drop in the same period a year earlier.

Russian stocks trade at 5.2 times estimated earnings, having lost 1.9 percent this year. That compares with a 6 percent gain for the MSCI Emerging-Market Index which trades at 9.8 times projected earnings.