Russian Stocks Surge With Ruble on Putin's Claim of Pullback

[Purveyor]

By Vladimir Kuznetsov and Natasha Doff May 7, 2014 12:21 PM ET

Russian stocks and bonds rallied the most in seven weeks and the ruble gained as President Vladimir Putin said he was pulling troops away from the Ukrainian border while urging separatists to delay a referendum to ease tension.

The Micex Index jumped 3.4 percent to 1,363.48, the biggest increase since March 18. Yields on ruble-denominated debt due in February 2027 fell 33 basis points to 9.14 percent. The currency strengthened 1.1 percent to 41.2461 against the central bank’s target dollar-euro basket at 6 p.m. in Moscow when the central bank ends open-market operations. Ukraine stocks, bonds and currency gained.

Investors are anticipating that the shift in rhetoric signals a new tack from Putin that may lower the likelihood the U.S. and European Union will impose further sanctions on Russia. Putin called on separatists in southern and eastern Ukraine to postpone votes over regional autonomy planned for May 11 and said the country’s presidential election set for later this month was a step in the right direction.

“The markets are cutting the probability of sanctions in the near future,” Vladimir Miklashevksy, a strategist at Danske Bank A/S in Helsinki, said by e-mail. “The ruble is celebrating.”

The Donetsk and Luhansk regions should delay the referendums to help establish dialogue with the government in Kiev, Putin said today in Moscow at a meeting with Didier Burkhalter, chairman of the Organization for Security and Cooperation in Europe. Violence in Ukraine must stop for any dialogue to begin, Putin said.

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http://www.bloomberg.com/news/2014-05-07/russian-bonds-climb-as-fresh-talks-call-attracts-bargain-hunters.html

[pampango]

1. "Less chance of sanctions." "The ruble is celebrating."

One things seems sure. If this crisis is resolved without further violence, invasions but with negotiations and agreements, republicans will never give Obama credit for the use of sanctions and negotiations rather than dropping some bombs on someone.

[Turbineguy]

2. His admission last week of "losing control"

of the pro-Russia groups was a smart move. It allows him a way out of this mess.