UPDATE 1-Russian shares bruised by global concerns, rouble steady
* Russian stocks fall, tracking oil and emerging markets
* Strong services data points to economic resilience
* Central bank hints at higher interest rates
(Recasts, adds analyst comments)
By Maya Dyakina
MOSCOW, Oct 3 (Reuters) - Russia attracted relatively strong demand for its long-dated treasury bonds on Wednesday despite a weaker rouble, while the equity market extended losses on global economic woes, prior to a series of central bank meetings.
At 1400 GMT, the dollar-traded RTS index
had shed 0.68 percent to 1,497.54 points and the rouble-based MICEX
was down 0.6 percent to 1,477.02, breaching a technical support level of 1,480.
Russian shares reacted positively to a U.S. job data report
, suggesting the private sector added more jobs than expected last month, but an upward trend was short-lived as the market awaited the European Central Bank meeting on Thursday
Trading will remain subdued till there is more clarity on the timing of financial aid to Spain, traders say.
"If Spain goes for help, then bond yields will drop and stock prices will rise slightly," said Angelika Genkel an analyst at Alfa-bank, adding that the market awaits stimulus measures of central banks to prompt more active trading.
Russian markets fell along with emerging market equities
, which have been hurt by further signs of a slowdown in China, where the purchasing managers index for the service sector has declined to its lowest in nearly two years.
Metal stocks, sensitive to China's economic data, were among the biggest losers, with Norilsk Nickel
down 1.63 percent and Novolipetsk Steel 1.35 percent lower.
However, growth in Russia's own service sector accelerated in September, suggesting the economy is surprisingly resilient despite recent fears over slowdown.
"This (data) is in line with our base case, where macro momentum improves towards the end of the year," Uralsib analysts wrote in a note. They pointed to the likelihood of renewed inflows into Russia funds, saying this should ultimately drive stock prices higher, forecasting the RTS index reading at 1,760 by year-end.
The latest economic data followed central bank comments ahead of a policy meeting this week that inflation poses a greater risk than an economic slowdown.
The central bank sees the current interest rate corridor as "too wide", First Deputy Chairman Alexei Ulyukayev said in an interview with Russia 24 TV channel on Tuesday, adding that it may hike a deposit rate which stands at 4.25 percent to narrow the range
"We note that Ulyukayev is the key decision-maker in the issues of monetary policy and any such mentioning of the likely moves in the past by him has led to an actual policy move by the CBR. Therefore, we think that another rate hike this week is presently all but certain", an economist at Bank of America Merrill Lynch, Vladimir Osakovskiy, wrote in a note.
The Russian currency shed 0.12 percent to 31.12 against the dollar
, and was flat against the euro
The Russian debt market remained broadly stable on Wednesday. Russia's 30-year benchmark Eurobond
yielded 2.89 percent, compared to 2.84 percent on Tuesday.
Russia saw relatively strong demand for its 15-year OFZ treasury bonds
. The finance ministry sold 18.56 billion roubles ($596.86 million) at an average yield of 8.22 percent, offering premium to the secondary market.
Russian Markets Latest Net % % Change Change Change on year STOCKS MICEX 1477.02 -8.61 -0.58 5.33 RTS 1497.54 -10.23 -0.68 8.37 London ADRs
864.61 -5.24 -0.60 11.07
Emrg Mkt Indx
1003.77 -2.46 -0.24 9.54
802.81 -5.35 -0.66 8.96
92.29 0.39 0.42 17.03 VTB 0.05 0.00 0.37 -6.88
158.80 -0.50 -0.31 -7.30
1960.20 -1.30 -0.07 15.14
137.00 -0.90 -0.65 -9.87
31.12 0.04 0.12 -3.19
40.18 -0.01 -0.03 -3.73
35.20 0.01 0.04 -3.47 DEBT Bid Ask %Rtn Coupon Russia 10-yr bond
7.80 7.75 0.02 7.60
MONEY MARKET Bid Ask Close Overnight rate 5.30 5.80 5.79
All data taken from Reuters at 1400 GMT
(Reporting by Maya Dyakina; editing by Jason Bush; editing by Stephen Nisbet)
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Keywords: RUSSIA MARKETS/