The rebound of Russian London-traded shares was short-lived on Monday and gains halved by midday as investors said they were keen to see evidence of government money finally reaching the market this week.
Russian local shares, which were suspended on Friday, fell sharply as they chased heavy Friday losses of London-listed stocks. The fall prompted another suspension on Monday.
The market was unimpressed by the upper house of parliament's decision to approve a $86 billion financial sector rescue plan as analysts said they feared only state firms and a number of well-connected billionaires would benefit from it.
"People are using verbal interventions to sell as soon as there is a rebound. There are no real buyers and no money on the market," said Iliya Talashev from Trust bank.
The FTSE Russia index of London-traded Russian ADRs, which fell 10 percent on Friday, was up 6.6 percent at 1130 GMT after gaining as much as 16 percent in early trade.
The local rouble-denominated MICEX exchange suspended trading for one hour from 1108 GMT as its index fell by 3.84 percent, loosing earlier gains of 5 percent, which were partly supported by a rebound in oil prices.
"The crisis has already spread to the real economy from the banking and financial sectors. You can't fix it in days, it will take much longer," said Andrei Kukk from bank UralSib.
Russian companies from steel firms to car makers have announced plans to scale back production and cut jobs.
One of Russia's biggest banks, Alfa Bank, said it had suspended all Russian stocks ratings and would now focus on the rapidly changing macroeconomic landscape.
"The Russian markets have been repeatedly shut down by the regulator in recent weeks… This has led to substantial indicative mispricing on stocks that continue to trade in the ADR markets but cannot be meaningfully arbitraged," Alfa said in a note.
Russian stocks recorded their worst weekly performance last week since the 1998 financial crisis and are now down 68 percent from their peak in May.
Prime Minister Vladimir Putin has said the government could start buying shares to support the market in the next few days.
State-controlled stocks showed better performance on Monday than their private peers with gas monopoly Gazprom up 8 percent and oil major Rosneft up 8.5 percent.
Stock purchases are part of the government's combined $210 billion rescue package for the financial sector, $86 billion of which was cleared by the upper house of the parliament, the Federation Council, on Monday.
The plan will allow large state banks to lend $36 billion to the banking system while up to $50 billion will go via state VEB bank to help Russian companies refinance a total of $120 billion of Western loans before the end of 2009.
Dmitry Ananiyev, the head of the Federation Council's financial markets committee, said banks could start getting money on Thursday or Friday, when President Dmitry Medvedev signs the rescue package draft law.
But analysts warned that the oversight in the bill was weak, and state-controlled or state-friendly firms are likely to benefit most.
"This is consistent with another trend likely to emerge from the financial crisis — as consolidation looms for some sectors, state-affiliated companies or well-connected oligarchs stand to be the big winners," Alexander Kliment, analyst at Eurasia Group said in a note.
Russian money market rates stood at 7.5-8.0 percent, down from as high as 10 percent last week, but still much higher than the usual 4-5 percent.
The rouble stood close to the upper end of the central bank's range of 30.40 roubles versus the euro/dollar basket and dealers said Monday's activity on the forex market was slim.
Last week, the central bank injected around $15 billion to support the currency from weakening and prevent the stock market panic spreading to the streets.
"The rouble is also likely to face more pressure this week as, globally, traders are dumping developing economy currencies," said UralSib's chief strategist Chris Weafer.
