Russian markets stopped trading for a second day after emergency funding measures by the government failed to halt the biggest stock rout since the country's debt default and currency devaluation a decade ago.
The ruble-denominated Micex Stock Exchange suspended trading indefinitely at 12:10pm. after its index erased a 7.6 per cent gain and plunged as much as 10 per cent within an hour.
The benchmark fell 17 per cent yesterday, the biggest drop since Bloomberg started tracking the gauge in May 2001.
The dollar- denominated RTS halted trading after similar declines. The government yesterday injected $20 billion into the interbank lending market via central bank and Finance Ministry auctions in a bid to contain soaring borrowing rates as credit dried up in the wake of the Lehman Brothers Holdings Inc. bankruptcy.
The one-day MosPrime overnight rate, a gauge for monitoring liquidity demand, leapt 25 basis points to a record 11.08 percent today.
The Finance Ministry attempted to stop the selloff by offering 1.13 trillion rubles ($44 billion) of budget funds to the country's three biggest banks, OAO Sberbank, VTB Group and OAO Gazprombank, for at least three months.
"The bond market remains effectively closed and banks are reluctant to lend to one another," said Julian Rimmer, head of sales trading at UralSib Financial Corp. in London.
"The problems experienced by KIT Finance have heightened counterparty risk and reduced liquidity further."
Finance Ministry Minister Alexei Kudrin said on state television that the decision to increase the amount of budget funds available to three state-controlled banks would "smooth over the shock changes" in the markets and enable the banks to make loans to smaller competitors.
Bloomberg