Page last updated at 14:36 GMT, Friday, 19 September 2008 15:36 UK

Surge forces Russian market close

Micex trading floor (18 September 2008)
Financial markets in Moscow have collapsed since the highs of May

Russia's two leading stock exchanges were forced to close twice on Friday after share prices rose too sharply, before being reopened before the close.

Trading was halted on the RTS and Micex indexes within an hour of opening. They then reopened only to close again after rising 25.4% and 20.2% respectively.

The indexes were suspended on Wednesday after huge falls, prompting the state to pump billions of dollars into banks.

Markets in Asia also rallied strongly after news of a US rescue plan emerged.

On Thursday, US officials said they were negotiating with Congress on a comprehensive plan to rid banks of the bad debts that are at the "root" of the devastating global financial crisis.

Afterwards, both Republicans and Democrats suggested an agreement was close.

Back on 'normal course'

The big gains on the Russian Trading System (RTS) index and Moscow Interbank Currency Exchange (Micex) indexes came only a day after they were suspended in response to losses not seen since Russia's economy collapsed in 1998.

The statements about the pouring of money into the Russian financial system and the series of meetings that took place undoubtedly calmed [the situation]
Aleksey Rybnikov
Head of the Micex

The Micex fell 25% in only two-and-a-half days, leaving it more than 55% down on its May peak.

The head of the Micex, Alexei Rybnikov, said the continued falls on the Russian stock markets had been counteracted by the government's decision earlier this week to pump $44bn (24bn) into the banking system.

"The statements about the pouring of money into the Russian financial system and the series of meetings that took place undoubtedly calmed [the situation]," he told Russian channel Vesti TV.

Analysts estimate that $36bn (19.8bn) in foreign investment has left Russia since early August, according to the Reuters news agency.

'No systemic problems'

Earlier, Prime Minister Vladimir Putin told international investors that the recent financial turmoil showed Russia needed to modernise its free market economy rather than roll it back.

"Our policy, our basic approaches remain unchanged," he said in a speech at an economic forum in the Black Sea resort of Sochi. "We are betting on private initiative, freedom of enterprise and rational integration into the world economy."

Vladimir Putin in Sochi
There will be no politically motivated market closures or a break-up of economic ties by Russia
Vladimir Putin
Russian prime minister

Mr Putin said his country's economy was much more developed than before and had a much higher safety margin.

"We have no systemic problems in the Russian economy. All basic economic indicators are alright," he said.

High oil prices helped Russia recover from the economy's collapse in 1998. Analysts say the country is now virtually free of debt, boasts massive currency reserves and has a more diversified economy.

The prime minister also said any attempt to throw his country back to the times of the Cold War was a direct threat to Russia's economic modernisation project, and insisted: "Confrontation is not our choice."

"There will be no politically motivated market closures or a break-up of economic ties by Russia," he added. "We are thinking about other things, first and foremost about how to kick-start new factors of economic growth."

Mr Putin was speaking a day after the US Secretary of State, Condoleezza Rice, said Russia was on a "one-way path to isolation and irrelevance" because of its invasion of Georgia last month.


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