Russia's RTS stock exchange index plunged nearly four percent in the first ten minutes of trade on Monday following Asian markets after Standard & Poor's downgrade of the United States' top credit rating, the first in the country’s history.
The RTS index dropped 3.72 percent to 1,739.88. The index of the Moscow Interbank Currency Exchange (MICEX), which opens half an hour later, fell about 2.7 percent to 1,544.10 at opening of trade.
"As far as Russia and Russia’s financial markets for the balance of 2011 are concerned, the key link remains the oil price," VTB Capital investment bank said in a research note.
"Both the ruble and the RTS Index have already overreacted relative to the oil price moves compared with their behavior in 2011 so far ... Obviously, as the events of the weekend amplify the dislocations induced by the fallout of last week ... the near term dynamics might be quite wobbly."
Since Thursday, international stock markets have been falling to their lowest since late 2010, and more losses are feared if governments do not stabilize the euro zone's debt crisis soon and prevent the U.S. economy from sliding back into recession.
The Russian stock market joined the panic on international trading floors on Friday with stock prices slumping an average four percent at open but recovering later.
