Russian shares fall after heavy fighting in Ukraine
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MOSCOW: Russian shares fell on Friday following fierce fighting in eastern Ukraine despite plans for a ceasefire to end an armed rebellion by pro-Russian separatists.
The rouble-based MICEX index was down 0.4 percent at 1,488.5 points at 0705 GMT, while the dollar-denominated RTS index was off 0.7 percent at 1,362.6 points.
“Given another round of escalation of the Ukrainian conflict, one should expect Russian shares to fall after trading opens,” Grigory Birg, an analyst at Investcafe, said in a note.
Ukrainian troops using artillery and heavy armour were locked in a battle with pro-Russian separatists on Thursday, and a rebel commander acknowledged big losses among separatists heavily outgunned by government forces.
The battle came despite Ukraine’s new president preparing to unveil a 14-step peace plan, including a temporary unilateral ceasefire by government troops and an amnesty for separatist fighters who lay down their arms.
Also weighing on sentiment, NATO said on Thursday that at least a few thousand more Russian troops were at Ukraine’s eastern border.
Tensions between Moscow and Kyiv have been exacerbated by a price dispute over Russian gas, which has led Ukraine to withhold payment and Russia to cut off supplies.
Russian shares, which crashed around 18 percent in March on fears Russia would invade Ukraine and draw crippling economic sanctions from the West, are now trading above levels touched before the Ukraine crisis broke.
They are up more than 3 percent in June, supported in part by a jump in oil prices to above $115 a barrel following the rise of a militant insurgency in major producer Iraq.
The rouble weakened by 0.06 percent against the dollar on Friday to trade at 34.41 and slipped 0.18 percent against the euro to 46.87.
It was down 0.11 percent at 40.01 against the dollar-euro basket that the central bank uses to guide the rouble’s nominal exchange rate.
Copyright Reuters, 2014