UPDATE 1-Russian shares fall as Rostelecom buyout premium disappoints

MOSCOW Thu Nov 21, 2013 9:37am EST

MOSCOW Nov 21 (Reuters) - A dive for shares in Rostelecom helped push Russia's stock market lower on Thursday on disappointment over the price offered by the state telecoms company to buy out shareholders who oppose a merger of its mobile business with Tele2 Russia.

The rouble traded at a two-month low, hit by sluggish economic growth and concerns over toughening regulation of banks in Russia, as well as fears of tighter monetary policy in the United States.

At 1235 GMT, the broad rouble-denominated MICEX share index was down 1.1 percent at 1,491 points and its dollar-denominated peer was down 1.6 percent at 1,424 points.

Rostelecom fell 3.6 percent. The company plans to spin off its mobile business and merge it with Tele2 Russia, the country's fourth-biggest mobile operator, before the end of the year.

Its board set a price for buying out those shareholders who do not support the move which represented a premium over Wednesday's closing price of 7 percent for its common shares and 15 percent for its preferred shares.

That made participation in the buyout only marginally attractive, Uralsib Capital analysts said in a note.

VTB Capital analysts said they had expected Rostelecom stock to fall as investors did not have to own the stock after the record date, Nov. 20, and could sell it and buy it back later if they wanted to take part in the buyout.

Other Russian stocks followed their emerging market peers lower, as investors began ditching riskier assets after the release of minutes from the U.S. Federal Reserve's last meeting hinted at stimulus tapering.

Russian stocks are trading at an average share price to 2013 earnings ratio of about 6.5, said Andrey Kuznetsov, a strategist at Sberbank Investment Research - a bit less than half the ratio seen in countries in an index of emerging markets, partly due to perceptions of weaker corporate governance in Russia.

Veteran emerging markets investor Mark Mobius said on Thursday he had sold his fund's stake in Russia's TNK-BP Holding, walking away from his attempt to get a better buyout deal from the firm's new owner, Rosneft.

Mobius's exit follows a bruising exchange between minority shareholders and Igor Sechin, the boss of Rosneft, a state-controlled oil major.

Mobius's Franklin Templeton emerging markets group still has more than $1 billion invested in Russian equities.

Rosneft traded down 1.1 percent, in line with other heavyweight stocks.

"Although nobody is entirely bearish, we noticed a sensible lack of optimism about the Russian economy and fixed-income market," said Vladimir Osakovsky, an economist at BofAML, after hosting a client trip in Moscow to visit Russian government officials.

The rouble also fell victim to risk aversion and lower crude prices.

The currency was 0.1 percent lower against the dollar at 32.97 and 0.4 percent weaker versus the euro , at 44.39.

This left the rouble also 0.3 percent weaker against the dollar-euro basket at 38.11.

For rouble poll data see

For Russian equities guide see

For Russian treasury bonds see

Russia in graphics: link.reuters.com/dun63 (Writing by Lidia Kelly and Maya Nikolaeva; editing by Tom Pfeiffer)

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