Senior governmental official seeks to calm investor fears over Mechel

A senior Russian official sought to calm the markets Monday after investors dumped Russian stocks in the wake of Prime Minister Vladimir Putin's public criticism of the country's sixth-largest steelmaker.

Friday's rout followed a scathing attack by Putin on Mechel, the steel and coal firm, for alleged price-fixing.

"We hope that these events will be a lesson for everybody, not just for Mechel, but for every company, and we will all act in a civilized way," Arkady Dvorkovich, an aide to President Dmitry Medvedev, told reporters.

He added that Mechel is cooperating with antitrust authorities, which recently opened an investigation into the company's activities.

"We consider it a positive signal that the company has been cooperating with the anti-monopoly services these past weeks," said Dvorkovich.

Russian stock markets plummeted by more than 5 percent Friday, prompting investors to predict a change in sentiment toward Russia, and the end to its "safe haven" status amid a worsening global economic outlook. Mechel's share price fell by nearly 40 percent in New York after Putin's comments, wiping more than US$5 billion off its value.

Investor confidence was further knocked by the abrupt departure Thursday of Anglo-Russian oil firm TNK-BP CEO Robert Dudley, the central figure in an acrimonious shareholder dispute.

Dvorkovich reiterated that the government should not interfere in the dispute.

"I think there are no risks at all for TNK-BP in Russia today," he said.

He went on to underline the attractiveness of investing in Russia, saying that local stocks remain strongly undervalued.

As of mid-afternoon, the Russian markets were recovering some of last week's losses, with shares on both major indexes up around 1.2 percent.