Russian stocks gained for a fifth day and the ruble strengthened after oil’s biggest weekly advance in four years and as talks on a ceasefire in Ukraine continued.
The Micex Index of stocks rose 2% to reach the highest level since April 2011 with food retailer Magnit leading the advance. The ruble jumped 2% against the dollar. Government bonds climbed after central bank governor Elvira Nabiullina said policy makers are unlikely to reverse last month’s surprise interest rate cut.
Russian assets have been pummeled by falling oil prices and intensifying fighting in Ukraine. Today’s rebound follows a rally in the price of Brent and the prospect for a lasting agreement to end the fighting.
Following talks in Moscow on February 6, discussions resume in Berlin today aimed at preparing a summit for the leaders of Germany, France, Russia and Ukraine in Minsk, Belarus, on February 11.
“The reason number one that Russian markets are rising is strong oil, that’s the main factor,” Andrey Vashevnik, the chief investment officer at R&B Investment Fund Ltd. in Moscow, said. “All eyes are on the Ukraine peace talks, but so far we haven’t seen any results.”
Appetite for assets in the world’s biggest energy exporter has increased after oil rebounded more than 30% from a January 13 low. The slump in crude prices and sanctions over Ukraine have dragged Russia toward its first economic contraction since 2009.
Crude oil climbed as much as 2.2% to $59.06 per barrel, before erasing the advance and trading down 0.4%.
The ruble strengthened to 65.5480 by 11:10 a.m. in Moscow. The Micex climbed to 1,766.97, extending its five-day gain to 9.1% and rising to the highest level since April 2011. Magnit gained 6.2% to 11,765 per share, the strongest level in two weeks.
The yield on five-year government bonds fell 15 basis points to 13.69%. Inflation is set to slow after it accelerated to the fastest in almost seven years, Nabiullina said in an interview in Moscow on Saturday. The governor, who said she checks oil prices several times a day, doesn’t see a reason for another “massive” ruble decline.
Diplomatic efforts over Ukraine come as the US and some European allies consider supplying arms to Ukrainian forces. German Chancellor Angela Merkel warned of a deepening conflict that can’t be won militarily.
“The meeting in Moscow was rather positive news and hopes for a political solution to Ukraine’s crisis have come back again to the markets,” Vladimir Miklashevsky, a strategist at Danske Bank A/S in Helsinki, said in comments. “Oil seems to be holding ground, not falling to $40 like many had expected.”
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