Russian stock markets plunge 8 percent as oil prices fall

Russian stocks plunge as oil prices slide

MOSCOW — Russia’s main stock market plunged by nearly 8 percent Monday as falling oil prices and a gloomy economic outlook spooked investors.

The MICEX, the largest stock index, fell by 7.8 percent to 938 points, while the RTS, which closes earlier, posted a more modest 5 percent drop to 961 points.

Russia’s stock market has been one of the best performing this year so far— in sharp contrast to last year, when it shed some 70 percent of its value amid slumping oil prices and the global credit crunch.

But since its high at the beginning of June, the MICEX has dropped by more than 20 percent, formally pushing it into bear market territory.

Oil prices — the main prop of Russia’s economy — continued to weaken Monday, with U.S. crude dipping to $67 per barrel late afternoon.

Adding to concerns, the World Bank said in a global report issued Sunday that Russia would face a steeper-than-expected decline in gross domestic product of 7.5 percent this year and warned that the economic slowdown was spilling over into neighboring states.

In March, the bank had forecast that gross domestic output would contract by 4.5 percent.

The global crisis has battered Russia’s export-driven economy particularly hard, reversing an eight-year oil-fueled boom. The economy shrank by 9.5 percent in the first three months.