Russian stocks, ruble slide on euro debt worries

The Russian ruble slumped 61 kopecks against the dollar to 30.77 in afternoon MICEX trade on Tuesday and Russian stocks were sliding on news that a Greek referendum on a new debt relief program could pose a threat to eurozone financial stability. The value of the bi-currency basket, comprising $0.55 and 0.45 euros, increased 28 kopecks to 35.88 rubles while the ruble firmed 2 kopecks against the euro to 42.19. The worries over the future of the eurozone intensified after Greek Prime Minister Georgios Papandreou called for a public referendum on whether to accept the terms of a new bailout package for the country. Fitch rating agency said in a statement on Tuesday that a rejection of the rescue program devised by the European Union and the International Monetary Fund for Greece would increase the risk of Greece's default. "A rejection of the EU-IMF program recently negotiated by the Greek government would increase the risk of a forced and disorderly sovereign default and potentially a Greek exit from the euro. Both of which would have severe financial implications for the financial stability and viability of the eurozone," the statement said. The ruble is slumping against the greenback and slightly firming against the euro on Tuesday as market players are growing increasingly confident that slower economic growth in Europe will force the European Central Bank to cut its key interest rate, currently at 1.5 percent. The ECB's next meeting will be held on Thursday. BCS-Express analyst Valery Dmitriyev told RIA Novosti that China's delay in taking a decision on investing in the European bailout fund was prompting market players to dump risky assets, including the Russian ruble. The Russian dollar-denominated RTS stock index fell 5.78 percent to 1,472.89 as of 17:01 Moscow time, while the ruble-denominated MICEX index was down 3.31 percent to 1,448.96 as of 16:05 Moscow time. At 16:13 Moscow time the MICEX suspended trading, saying that operations would resume at 17:45 Moscow time. In Europe, the FTSE 100 index fell 3.53 percent to 5,348.49, Germany's DAX decreased 5.81 percent to 5,784.28 and France's CAC 40 went down 5.42 percent to 3,067.23 as of 17:04 Moscow time.