Russia's Prime Minister, Mikhail Kasyanov, said yesterday he was "deeply troubled" by the financial impact of an investigation into Yukos, the country's biggest oil firm, which has seen the nation's richest man jailed and revealed a fierce struggle for power at the heart of the Kremlin. Daniel McLaughlin, in Moscow

Moscow's main bourse closed up 1.9 per cent and Yukos climbed 8.1 per cent, as the market broadly welcomed the appointment of Dmitry Medvedev as the new presidential chief of staff, after liberal Kremlin stalwart Alexander Voloshin resigned over the spiralling Yukos affair.

The company's chief, Mikhail Khodorkovsky, was seized by special agents on his private jet last Saturday, and charged with more than $1 billion (€860 million) worth of fraud and tax evasion.

His allies say the tycoon, who funds liberal opposition parties and has hinted at presidential ambitions, is the victim of a crackdown by Kremlin hardliners on the "oligarchs" who made billions during the murky privatisations of the 1990s.

Alongside Mr Khodorkovsky, two other major Yukos shareholders have been charged with tax evasion and fraud, and a third shareholder was barred from running for parliament yesterday - a move that denies him the chance of immunity from prosecution.

Amid dozens of raids on the offices of Yukos and its affiliates, prosecutors also charged one of the firm's security chiefs with murder, and prosecutors stunned the market on Thursday evening when they froze a 44 per cent tranche of Yukos shares.

"The seizure of shares, especially shares of traded on the market, is a new phenomenon," said Mr Kasyanov. "And I would say I am deeply troubled by that phenomenon, and it is hard to know what the consequences will be."

Prosecutors released 2 per cent of shares in the company last night, saying their owners were not connected with criminal investigations into Yukos.

Russia's financial press was aghast at the share freeze yesterday.

"Business can react to such a development only by shutting down. In a country where property rights are not respected, only illegal business is possible," said the newspaper Vedomosti.

"The president should open his eyes and finally discover that prosecutors are destroying in one day what took years to create."

Vedomosti also warned that Russian business faced the threat of re-nationalisation, a move ruled out by Mr Putin earlier this week when he called for an end to the "speculation and hysteria" surrounding the Yukos case.

Business daily Kommersant said the value of Russia's stock market had dropped by more than 16 per cent - equivalent to $27 billion - since Mr Khodorkovsky's arrest.

Yukos shares plunged nearly 23 per cent this week and US oil majors ChevronTexaco and ExxonMobil suspended talks on buying a substantial stake in the firm after its chief was seized, a move that shocked political and financial analysts.

An analyst at Fitch rating agency said the Yukos case showed Russia was not ready for investment grade - a status that Moscow seeks to attract vital foreign capital.

"The events of the past week have tarnished President Vladimir Putin's market and reformist credentials," said Mr Edward Parker, Fitch analyst in charge of Russia in London.

Mr Sergei Markov, an analyst who is close to the Kremlin, suggested this week that the interest of the US oil majors, rather than Mr Khodorkovsky's political opposition to the Kremlin, may have sparked the crackdown on Yukos.

"We did not privatise so that the property could be sold to the United States and Khodorkovsky would get the money," he said.

Mr Kasyanov's expression of concern over the seizure of Yukos shares was his first comment on the case since Mr Putin told ministers this week not to interfere in prosecutors' work.

He also refused to discuss the matter with business leaders outraged by the seizure of Mr Khodorkovsky, whose company has been hailed in the West as one of Russia's most transparent.

Mr Kasyanov is seen as particularly vulnerable to a current purge of the men that Mr Putin inherited in 2000 from Boris Yeltsin.

Mr Voloshin was the last Kremlin insider to hail from this clique, which was seen as liberal, Western-minded and friendly to big business.

In its place has come a coterie of Mr Putin's former comrades from the KGB.

The president, a former KGB agent in east Germany, met senior Russian and Western bankers on Thursday night to try and allay fears of a creeping takeover by "hawks" who want to slash the wealth and political might of the oligarchs.

The appointment to Kremlin chief of staff of Mr Medvedev, a lawyer who worked in St Petersburg with Mr Putin almost a decade ago, calmed worries that an ex-security service hardliner would fill the post.

But Mr Medvedev's business experience as chairman of state-run Gazprom, the world's largest gas producer, was not enough to calm some Kremlin critics.

"This is bad and this is serious," said Mr Anatoly Chubais of Mr Voloshin's departure.

"The events of the last few weeks have elements that have to be interpreted as a change of course," said Mr Chubais, head of Russia's electricity monopoly and one of the architects of the rigged privatisations that created magnates like Mr Khodorkovsky.

In what many saw as a warning shot to the outspoken Mr Chubais, federal agents searched the offices of a Siberian subsidiary of his electricity monopoly yesterday, after investigators said they were probing alleged management fraud.