Russian stocks slide for fifth day after Malaysian plane crash




LONDON (MarketWatch) — Russian stocks continued their week-long slump on Friday a day after a Malaysia Airlines passenger jet was allegedly shot down by a surface-to-air missile in eastern Ukraine, returning the conflict in that country to the center of the international community’s attention.

Russia’s blue-chip MICEX index (XX:MCX)  slumped 1.8%, building on a 2.3% loss from Thursday. For the week, the benchmark was down 5.7%, putting it on track for the biggest weekly decline since mid-March, when the Ukraine region of Crimea voted in favor of joining Russia. The broader RTS index (RU:RTS)  shaved off 2.2% for an 8.1% weekly slide.

Ukrainian officials have accused pro-Russian separatists of firing a missile that struck the Malaysia Airlines jet, while Russia’s president, Vladimir Putin, said that the fault lay with the Ukrainian government for prolonging its battle against Russian sympathizers. U.S. intelligence agencies were divided over whether the missile was launched by the Russian military or the militants, but an official said “all roads lead to the Russians to some degree.” Meanwhile, the UN Security Council was set to hold an emergency meeting on Friday to discuss the crisis.

Chris Weafer, senior partner at Macro-Advisory in Moscow, said in a note that if the separatists are found responsible for the crash, pressure will mount on Russia to clearly disassociate itself from the militants.
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“If Russia does not take this verifiable action, western political pressure will definitely intensify and, with it, the risk of moving into Stage 3 sanctions,” he said. “The resulting Stage 3 sanctions would cripple investment and keep growth at the current low level for a long time.”

The incident adds to tensions in the region that earlier this week also was a key driver for market volatility. On late Wednesday, a Ukrainian fighter jet was shot down by missiles from a Russian plane — the third reported downing of a Ukrainian plane this week.

Also on Wednesday, the U.S. announced fresh, tougher sanctions on Russia such as barring oil giant Rosneft (RU:ROSN)  and Gazprombank OAO (RU:GZPR) , the nation’s third-largest bank, from obtaining new financing from U.S. capital markets. The European Union also revealed plans to to include Russian and Ukrainian companies that are helping to destabilize eastern Ukraine.

Several Russian heavyweights declined after the sanctions news and extended losses on Friday. Shares of Sberbank Rossia (RU:SBER)  dropped 1.8%, Gazprom OAO (RU:GAZP)  lost 1.6% and Rosneft gave 1.2%.

Russia-exposed commodities were also on the move, with palladium (PAU4)  giving up some of it’s gain from Thursday and losing 0.9% to $876.80 an ounce, while platinum (PLV4) shaved off 0.6% to 1,495.50.

“Since Russia is an important producer of platinum and palladium, the supply of both these precious metals remains fraught with uncertainty,” analysts at Commerzbank said in a note.

The ruble (USDRUB)  partly recovered from a sharp selloff on Thursday, with the dollar falling 0.7% to buy 35.042 rubles.[eap_ad_3]

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