MOSCOW, March 15 (AFP): Moscow stocks plunged to a four-year low Friday as jittery investors dumped their holdings ahead of a referendum in Crimea over its bid to break away from Ukraine and join Russia.
The capital's two main indices MICEX and RTS opened down, but losses accelerated to more than 5.0 per cent by midday to levels unseen since mid-2009.
The later recovered, with the MICEX closing down 0.89 per cent, while the RTS finished 1.43 per cent lower.
The ruble fell against major currencies on Friday, touching 51.07 against the euro from the previous day's 50.77. It slid to 36.65 rubles to the dollar from 36.60.
The Russian currency's approached a record low against the euro set last week, when the Russian financial markets panicked after President Vladimir Putin secured parliamentary approval for military intervention in Crimea.
On March 3, which has been dubbed "Black Monday" in Moscow, the euro reached a peak value of 51.20 rubles and the dollar rose to 37 rubles, breaking a record set during the economic crisis of 2009.
Analysts from Alfa-Bank said investors were getting rid of their Russian holdings before the Crimea vote on Sunday, fearful of economic consequences after the West warned of sanctions.
Markets recovered in late trading as 11th-hour talks began in London between US Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov.
The Russian foreign ministry earlier on Friday said that it "reserves the right" to protect its citizens in the whole of Ukraine.
"Even though the West's position softened a bit yesterday ... investors are still wary of possible sanctions resulting from the upcoming referendum on whether to secede and join the Russian Federation," Alfa-Bank said in a research note.
Former finance minister Alexei Kudrin has warned that such sanctions would speed up capital flight from the country, and wipe away any growth in 2014.
"Barring a last-minute positive surprise, Russia looks set to annex part of a foreign country at gunpoint. That would be the worst breach of international law and the peace in Europe since the Serb war against Bosnia 1992-95," said Holger Schmieding from Berenberg.
However, the analyst said the economic impact on Western markets would "remain temporary and limited".
"The ultimate loser in a standoff between Russia and the West will very likely be Putin," the analyst added.
The crisis also sent European and Asian stocks down, with Japan's benchmark Nikkei-225 index losing 3.30 per cent, or 488.32 points, to finish at 14,327.66 on Friday.
The Nikkei lost 6.20 per cent over the week, its biggest five-day drop of the year.
