Fatigue over Russia rumours sees Yukos trade halt

Yukos trading came to a near standstill as investors tired of endless rumours over the fate of Russia's largest oil producer and a Moscow court stuck another dagger in the heart of the wounded giant.

The court turned down a bid by Yukos to force the government sell its contested stake in a rival company to pay off its crushing tax bill.

The news came after Yukos shares ended the day down 2.3 percent on the RTS dollar-denominated index after just two trades. Volume was a microscopic 85,000 dollars (70,000 euros) amid reports of investors simply growing too tired of the epic saga pitting the onetime investor darling against Kremlin insiders.

"What I heard from traders is that people are just sick of the whole thing," said Zarko Stepanovsky of the Aton Capital investment bank.

"Some people are still waiting for a decision (from the courts) -- just in case they are surprised -- but I don't think anyone is expecting a positive outcome," in favor of Yukos, he said.

He said trade was down to a trickle in Yukos American Depository Receipts (ADRs) in London as well.

Tuesday's lull came the same day as the Moscow arbitration court was due to hear a case on whether Yukos could use its stake in rival Sibneft to pay off 3.4 billion dollars in back taxes claimed by the state.

Yukos and Sibneft were due to merge last year, but the deal fell apart at the last minute and as a result, Yukos's stake in Sibneft today stands at between 20 and 35 percent, depending on which side is doing the counting.

Yukos asked the court to order the government to sell the Sibneft stake to cover the tax bill instead of selling its prized production company, Yuganskneftegaz, whose accounts have been frozen pending a potential auction.

Analysts said Yugansk -- accounting for 60 percent of production at Russia's number one oil exporter -- will almost certainly remain on the auction block after the Sibneft decision went against Yukos.

Political observers saw it as a defining signal President Vladimir Putin's government to big business.

Critics have accused Putin of selectively targeting Yukos because its jailed founder and former chief executive Mikhail Khodorkovsky stood in open opposition to Kremlin policies on taxes and energy, and trying -- but failing -- to push his loyalists into parliament.

"First, (the ruling) will provide useful evidence on whether there is any inclination by the Russian authorities to resist apparent manipulation of the due process of recovering back tax from Yukos," the United Financial Group said in a research note.

"Secondly, while a victory for Yukos would by no means remove the threat to the company's survival ... it would ensure easy settlement of the 2000 liability without the sale of Yugansk, allowing more time for the whole affair to be settled in a more civilized manner."

HERE