MOSCOW: Russian stocks rebounded on Thursday and the rouble nudged upwards, after rallies against last Sunday's disputed election lost momentum following the detention of hundreds of demonstrators.
Russian markets had suffered losses in the past few days as demonstrators took to the streets after Sunday's general election. However, market players now see the selling as overdone, taking the view that Prime Minister Vladimir Putin's bid to return to the presidency next March would not be derailed by protests over alleged electoral fraud.
However, fresh protests planned for Saturday, coupled with uncertainty about the outcome of a European summit to discuss the euro zone debt crisis, will continue to test investors' nerves, market analysts said.
By 0706 GMT the dollar-based RTS share index was up 1 percent, while the rouble-traded MICEX gained 0.8 percent, both outperforming the broader emerging market index, which fell 0.5 percent.
Stocks were supported by strong oil prices, as Brent crude gained 40 cents on opening to reach $110 a dollar, well clear of the $105 price the Russian government has factored into its 2011 budget.
Shares in Russian steelmaker Evraz jumped 6.5 percent, while precious metals miner Polymetal International gained 3 percent, after the FTSE Group said on Wednesday that the companies would be promoted to the FTSE 100 index. The companies will join the blue-chip index on Dec. 19.
On Wednesday night police blocked protesters from gathering in central Moscow, after the Kremlin said that unauthorised rallies would be stopped.
A demonstration by opposition activists planned for Saturday will be closely watched by investors.
"While our base position is that the protests do not currently have the potential to cause a major threat there is always a risk of escalation," Chris Weafer, chief strategist at Troika Dialog, wrote in a note.
"Investors will breathe a sigh of relief if the weekend passes relatively trouble-free and they then can focus more on the longer-term implications of the Duma election result."
Local players are also watching Thursday's meeting of the European Central Bank, the last of the year, and the European Union summit which gets underway on Thursday evening.
"We will probably see high-volume volatile trading tomorrow (Friday), as there will be plenty of news from Europe to digest today," said analysts at Uralsib in a note.
By 07.06 the rouble had nudged up 0.27 percent to 31.21 against the dollar.
Versus the euro, the rouble was virtually unchanged at 41.84. Russia's currency gained 0.17 against the basket, comprised of 0.55 dollars and 0.45 euros.
"Above all today, we are expecting trading within a range, but cannot exclude some weakening of the rouble as there is a lot of ambiguity on the foreign markets and inside the country," said Mikhail Azizbayev, a dealer at Metallinvestbank.
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