Oil price rise provides relief for rouble

Russia received a measure of relief on Friday as Brent oil prices regained

ground to rise above $60 a barrel, helping the beleaguered rouble to claw back a small portion of the huge losses incurred in a week of turmoil.

Having lost about 58 per cent of its value at the culmination on Monday of a months-long rout, the rouble gained another 5 per cent in the final session of the week as global markets extended a pre-Christmas rally.

Confirmation that the Russian finance ministry had sold foreign currency was a further factor in the rouble’s rise.

The currency had slumped as much as 20 per cent against the dollar despite a massive hike in interest rates on Monday night, threatening the stability on which Russian president Vladimir Putin had built his popularity.

Russia’s central bank moved late on Friday to raise the limit on foreign exchange swap operations to $10 billion from $2 billion to address a shortage of roubles in money markets.

Overnight interest rates on the Russian interbank market climbed to 25 per cent on Friday, well above the central bank’s 17 per cent benchmark rate, as lenders scrambled for roubles to balance up their books for the day and manage their liquidity needs.

Although the central bank has been limiting rouble liquidity in recent months to underpin the currency, which has nearly halved in value against the dollar this year, this has led to shortages among lenders required to keep a certain amount of liquid cash on hand.

The latest intervention by the central bank came at the end of a tumultuous week. With the currency laid low both by the decline in oil prices and western sanctions over its incursions in Ukraine, German foreign minister Frank-Walter Steinmeier expressed concern on Friday that European penalties could destabilise Russia.

His warning in a Der Spiegel interview against "turning the screw" came as EU leaders said in Brussels that they were ready to "stay the course" in the confrontation if Mr Putin refuses to pull back from Ukraine.

DUBLIN

The Iseq recorded a 0.21 per cent gain to close at 5,168.80 but traders said volumes were “typically down” ahead of next week’s holiday.

After rebuffing a takeover bid by International Consolidated Airlines Group (IAG), Aer Lingus fell back 0.25 per cent to finish at €1.98. The share is struggling to break through the €2 barrier but traders believe IAG chief Willie Walsh has the firepower and nous to persuade the Government and Ryanair to sell their stakes in Aer Lingus.

Bank of Ireland lost 2.17 per cent to close at 31½ cent, a decline which traders attributed to the expiry of options. CRH gained 0.52 per cent to close at €19.45.

Smurfit Kappa added 3.77 per cent to finish at €18.16, a rise of 66 cent. "There's a couple of buyers coming around," said one trader. Providence Resources gained more than 9 per cent to close at 87.3 cent but one trader said there was no indication that expectations of any particular corporate activity was behind the rise.

LONDON

British-listed stocks rose for a fourth day, with the FTSE 100 Index posting its biggest weekly advance for three years as banks and commodity shares rose.

HSBC Holdings

and

Barclays

gained at least 1.3 per cent.

The FTSE 100 added 79.27 points, or 1.2 per cent, to 6,545.27 at the close in London to cap a 3.9 per cent rise.

EUROPE

European stocks advanced, after fluctuating between gains and losses, heading for their biggest four-day rally in more than two years. The

Stoxx Europe 600 Index

added 0.4 per cent to 340.51 after earlier rising as much as 0.8 per cent and falling 0.6 per cent.

NEW YORK

US stocks were little changed, following the best two-day rally in three years for benchmark indexes, as commodity producers rallied with the price of oil. The

Standard & Poor’s 500 Index

rose less than 0.3 per cent at lunchtime in New York.– (Additional reporting by agencies)