Russia's stock market plunged yesterday as the central bank stepped in to protect the rouble and the banking system amid calls for a devaluation.

President Boris Yeltsin, on vacation outside Moscow, called Prime Minister Sergei Kiriyenko to offer support and underline that the government's austerity and stabilisation efforts were vital.

The sums changing hands in Moscow's nascent markets were tiny by global standards but the diminishing faith their slide demonstrated in the Kremlin's reform programme has implications for Western economies and for policymakers worldwide.

"The meltdown in Russian financial markets has reached the terminal phase," international financier Mr George Soros wrote in the Financial Times, urging a rouble devaluation accompanied by swift Western help for Russia in stabilising the currency.

Shares lost 6.5 per cent after initial drops of 15 per cent, although trade was minimal. Moody's Investors Service cut the credit ratings of several Russian banks, and Standard and Poor's downgraded Russia's foreign currency senior unsecured credit ratings to B minus from B plus.

"This is Black Thursday for the Russian financial markets," ORT, the state-owned television announced in opening its bulletin.

Mr Kiriyenko, installed by Yeltsin in March to take reforms in hand, had to rail against the trend for a second day running.

Concerns that Russia's post-communist economy could implode as confidence evaporates was likely to provoke new calls for wealthy nations to stand by the Kremlin reformers.

A White House spokesman said last night that senior officials of the Group of Seven leading industrial countries discussed the crises in Asia and Russia in a telephone conference.

Mr Kiriyenko won a breathing space when the International Monetary Fund led a $22.6 billion bail-out in July. He said his government could now meet its obligations this month and next.

The West backed the IMF deal for fear a financial crisis in Moscow would unbalance the world's second-ranked nuclear power.

Since then Mr Kiriyenko has been racing against time to raise tax revenues despite opposition from the Communist-dominated parliament. Some investors now fear he is losing the battle.

The leading RTS1-Interfax share index closed 6.49 per cent lower at 101.17, levels not seen for two years.