Medvedev set for crisis meeting as Russian stocks dive again

President Medvedev prepared to meet leading bankers and members of the government on Friday as the Russian stock indices slumped again to their lowest level since July 2010, as a wave of fresh uncertainty rocked global markets. "The situation is difficult, we should be very attentive. I am going to meet with my colleagues from the government and bank community to discuss it," Medvedev said. "We must understand what is happening, which objective and subjective factors are influencing the situation. We will also talk about the euro zone, the U.S. economy, I mean, about decisions made by our U.S. colleagues," he said, adding other countries moves to solve the problem should be analyzed. Some Russian stocks hit their lowest for more than a year and the ruble extended losses as Russia followed world markets in concerns over the euro zone and uncertainty over moves by the US Fed earlier this week, analysts said. The ruble-denominated MICEX exchange index plunged 6.29 percent to 1,305 by 14:55 Moscow time, while the dollar-denominated RTS stock exchange plummeted 6.49percent to 1,297.75. The losses follow Thursday's plunge when the RTS index plummeted 8.61 percent to 1,388 and the MICEX index dropped 7.82 percent to 1,389. "The G20 meeting is continuing and more concrete measures to overcome the crisis (for instance, widening the IMF and the European Financial Stability Fund's authority and funding) may be announced at its end," Yury Volos, an analyst at Bank of Moscow, said. "Otherwise, ... markets decrease may continue at a higher speed." The official exchange rate of Russian ruble for tomorrow settlement fell 20 kopecks to 32.10 to the dollar and 12 kopecks to 43.36 to the euro. A bi-currency basket, comprising $0.55 and 0.45 euros, hit the upper limit of the floating currency corridor of 37.20 rubles at Friday's open. VTB Capital analysts said in a research note they thought the central bank had sold more than its usual 400 million rubles on Thursday to calm the markets. "We expect the central bank will have to shift the band up several times within the next few weeks, in line with its existing intervention mechanism of spending more reserves to support the ruble. However, we do not exclude the central bank's finding an appropriate moment to widen the band by the end of the year," VTB Capital said. It also said not only external, but also internal factors were pushing the ruble down. "It is mainly external factors which have triggered the recent sharp the ruble depreciation on the back of non-residents' massive liquidations in the domestic equity and bond markets. However, there are internal factors (seasonally weaker current account balance, political uncertainty ahead of elections) which could keep the ruble from making a material recovery until the end of the fourth quarter of 2011, even if the global markets stabilize," it said, referring to parliamentary elections in December and presidential polls in March. "Hence, in the near term (the next two-three months), we see the risks for the ruble being more to the downside than the upside." Promsvyazbank analysts said the ruble would be supported at 31.85 per dollar level. In Europe, the DAX lost 2.4 percent to 5,040.35, CAC40 edged down 1.97 percent to 2,726.96, while the FTSE100 eased 1.4 percent to 4,970.81 by 11:22 GMT.