MOSCOW: Russian stock markets and the rouble inched lower on Monday, hit by Standard & Poor's decision to cut credit ratings of some euro zone countries, but strong oil prices cushioned Russia's assets against a deeper fall.
The dollar-based RTS index and its rouble-traded peer MICEX both fell 0.9 percent by 0730 GMT, on the first trading after day S&P downgraded ratings of Italy, Spain, Portugal and Cyprus by two notches and ratings of France, Austria, Malta, Slovakia and Slovenia by one notch.
"Clearly, the European debt topic can be expected to dominate market moods today," analysts at Uralsib Capital said in a note.
Prices for oil, Russia's key export, remained strong at around $111 per barrel, above the average price of $100 factored into this year's budget.
Favourable conditions on commodity markets helped Russia to weather 2011's financial storms with relatively minor losses and are seen as the key driver of economic growth in 2012.
"Russia remains in very good fiscal shape with a federal budget surplus of up to 1 percent of GDP and has historically low inflation of about 6.1 percent, which are key factors for macroeconomic stability," Uralsib said in a note.
High oil prices are keeping the country's current account in surplus despite 2011 capital outflows of $84.2 billion, the second highest annual reading in the post-Soviet era.
The rouble gave up 0.15 percent to 31.91 versus the dollar and was steady at 40.38 against the euro.
Against the euro-dollar basket, made up of 0.55 dollars and 0.45 euros, the rouble eased 0.1 percent to 35.73, hovering close to the verge of the 34.70-35.70 band where the central bank does not carry out any forex interventions.
"The market mood calls for a rise in the basket towards 36 roubles due to the unfavourable backdrop (after S&P's move on the euro zone), while exporters are holding their revenues," said Roman Pakhomenko, chief dealer at Lanta bank, referring to usual conversion of dollar export-related revenues in the second half of every month to meet local tax payments.
The rouble is expected to gain ground closer to the month-end when exporters will step up selling of dollars and euros.
Russia's 30-year benchmark Eurobonds saw a pick-up in its yields to 4.46 percent from 4.43 percent seen earlier this month as a result of rising global risk aversion.
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