Banking Crisis: Russian Markets Stage Dramatic Comeback

Russia's two main stockmarkets bounced back dramatically this morning after trading resumed today for the first time since Wednesday, but amid strong signs of continuing volatility.

Russia's rouble-denominated MICEX and dollar-denominated RTS reopened after their suspension two days ago – only to shut again for an hour as shares soared. The exchanges re-opened at midday Moscow time.

Regulators sought today's temporary closure after share rises jumped above 15%. By this afternoon the MICEK was up 23.1% on the day, while the RTS had risen 15.5%.

The sudden revival of Russian markets, which coincided with shares rallying strongly on Wall Street and in London, came after the Kremlin pumped nearly $60bn (£33bn) into money markets. Russia's finance ministry announced on Wednesday it was lending $44bn to the country's three main banks, while the central bank announced loans of $14bn designed to ease the acute liquidity crisis.

This morning the Russian prime minister, Vladimir Putin, said that the economy remained healthy. Speaking at an investors' forum in the Black Sea resort of Sochi, he said that "fundamental indicators' including Russia's foreign debt surplus were in line with "the norm".

"Our response to problems that emerge will be market-orientated. The government and the central bank have sufficient reserves to defend the currency and the financial system," Putin declared. Other Kremlin officials made clear the Russian government was prepared to intervene in the crisis.

Russia's market has performed worse than any other emerging market this year – falling some $680bn since its all-time high in May. On Tuesday the MICEX dropped by 17% – its biggest slide since Russia's 1998 financial crash.

Russia's economy is these days integrated into global markets, and has suffered as shares have fallen this week around the world. But the slump in Russia has been particularly acute because of falling oil prices. There has also been a huge flight of capital from Russia since last month's war in Georgia, with foreign investors taking out $35bn.