The Russian stock market recovered from some of its early losses on Friday, prompted by big falls in Europe and the U.S., and was down around two percent at lunchtime.
By 14:00 Moscow time, the Moscow Interbank Currency Exchange (MICEX) index was down by 2.74 percent to 1,576.35, recovering from a 4.07 percent fall at opening of trade.
The RTS exchange index was down by 2.68 percent to 1,788.47 after a 4.60 percent fall at start of trading.
Russia's top lender Sberbank lost 2.55 percent, VTB bank 2.71 percent, Gazprom sank 4.12 percent, Surgutneftegas shaved off 2.16 percent. Magnit food retailer was the only exception with its shares hovering at around zero.
Analysts think the bad news is not over yet.
"Local trading floors did not have time to factor in all negative news yesterday, this is why prices will continue falling today," said Bank of Moscow analyst Maxim Koshelev.
He said the market would watch U.S. unemployment data for July to be released at 16:30 Moscow time. The figure was unexpectedly high last month.
International stock markets fell to their lowest since late 2010 on Friday and more losses are feared if governments do not stabilize the eurozone's debt crisis soon and prevent the U.S. economy from sliding back into recession.
Shortly after the opening, the London Stock Exchange's key FTSE 100 Index was down 3.2 percent at 5,218.25. Frankfurt's Dax Index decreased 2.45 percent to 5,260.80 as of 09:45 GMT.
Prices for oil, Russia's key export, on Friday started to recover after they sank to a five-month low on Thursday amid perceived signs of slower economic recovery in the U.S. But September Brent futures recovered 0.73 percent to $108 per barrel.
Investcafe analyst Anna Bodrova said that $40 million had quit Russian equities in the week ending August 3 compared to $13 million a week earlier.
"There are reasons to believe that the weekly outflow of capital from funds will continue until the first days of September due to instability abroad after which local issues will again become interesting for international investors," she said.
A Russian Finance Ministry official, who requested anonymity, said the international markets slump of the last two days is not critical and will have no long-term consequences.
"The markets fell because of the publication of poor U.S. statistics, which show a slowdown in American economic growth. However, the fall is not critical. Nothing criminal has happened," the official told RIA Novosti.
"The markets have compensated for part of the loss and are recovering step by step, including U.S. and European currencies," the official said. "So, the situation does not look critical."
