Azernews.Az

By Bloomberg

Russian stocks and bonds extended a second week of gains and the ruble strengthened as oil rose and investors weighed prospects that a cease-fire in Ukraine will lead to a rolling back of sanctions.

Russia’s Micex Index climbed as much as 1.9 percent and the ruble headed for the highest close in three weeks against the dollar. While some investors point to the collapse of previous cease-fires, others speculated the latest deal, which takes effect on Feb. 15, will de-escalate the crisis.

“Long-term investors will be carefully watching how this cease-fire is implemented and looking out for any signals sanctions may be lifted,” Stanislav Kopylov, who helps manage 45 billion rubles ($695 million) at UralSib Asset Management in Moscow, said by phone. “Short-term investors have been buying Russian assets this week on higher oil and peace talks in Ukraine.”

Brent crude, which along with natural gas contributes half of Russia’s state revenue, climbed above $60 for the first time this year amid speculation that a decline in U.S. drilling will slow production and curb a global supply glut. A slump in oil prices last year combined with U.S. and European Union penalties for Russia’s alleged role in the violence in eastern Ukraine triggered a 46 percent slide in the ruble in 2014, the worst currency collapse since the nation’s 1998 default.

“With oil at such levels, the ruble should be trading higher,” Kopylov said

The ruble climbed 0.9 percent to 64.6640 as of 1:03 p.m. in Moscow, the strongest level on a closing basis since Jan. 23 and trimming this year’s decline to 6.4 percent.

Prodding Russia

Five-year government bonds climbed for a third day, reducing the yield 13 basis points to 13.52 percent, the lowest in two months. Yields remain almost six percentage points higher than they were on Feb. 28 last year, before President Vladimir Putin’s annexation of Ukraine’s Crimea peninsula.

The RTS stock index rose 2.9 percent to 887.04, set for a 7.3 percent advance in the week.

European Union leaders have started work on further sanctions to prod Russia to enforce the cease-fire, reflecting concern that the deal announced Thursday after more than 18 hours of talks will only mark a pause in the war that has devastated eastern Ukraine and left thousands dead.

Ukraine said rebel shelling during the night was as intense as before, with the heaviest fighting near Debaltseve, a strategic transport hub on a road connecting the rebel-held areas of Donetsk and Luhansk.