Russian stocks rebound on Medvedev remarks

Moscow: The Russian rouble and share indexes rebounded on Monday from a severe drop earlier in the day, boosted by President Dmitry Medvedev's statement the military conflict with Georgia might be nearing its end.

The benchmark RTS stock index turned positive, reversing losses of more than five per cent sustained in morning trading. State companies, including Sberbank and Gazprom, led the reversal.

"After Medvedev said the operation was finished, the market turned around and went up. But there is a lot of uncertainty ahead," a trader at a major Russian bank said.

Investor sentiment deteriorated following Russia's renewed bombing campaign in Georgia including areas outside the main conflict zone - Georgia's separatist region of South Ossetia.

US President George Bush denounced Moscow's "disproportionate response" to the South Ossetian crisis. But Medvedev said the operation was nearing its end while the Russian General Staff said that staying within the borders of South Ossetia was a "key principle". Medvedev also suggested sending international observers to the conflict zone.

Strong fundamentals

The recovery seemed to underline the view of some analysts that Russian econ-omic fundamentals remain solid and that any weakness is unlikely to last much longer than the conflict. RTS stood at 1,728 points, up 0.34 per cent at 1215 GMT while rouble-denominated MICEX was up 1.6 per cent.

The rouble was trading at 29.90 versus the central bank-monitored basket of 0.45 euros and $0.55, still weaker than Friday's close around 29.60., but off a session low of 30.10. The central bank intervened to support the currency.