UPDATE 2-Russia limits oil, mining share sales to foreigners

(Rewrites, adds Mechel placement proceeding, details on rules, televised comments from head regulator)

By Olga Popova

MOSCOW, July 9 (Reuters) - Russia laid down official limits on the sale to foreigners of shares in strategic and raw materials companies on Wednesday, giving new regulatory force to the government's grip on Russia's natural resources wealth.

The new ruling by the state markets regulator codifies what the Kremlin has long made clear: the government is loath to see more of Russia's strategic and extractive industries fall into the hands of outsiders.

Under the new rules, published on Wednesday and entering into effect in 10 days' time, companies engaged in geological exploration are subject to the tightest cap, and will be allowed to sell only 5 percent of their shares abroad.

"They have completely locked down the sector," Uralsib bank equity strategist Chris Weafer said.

Companies in strategic industries related to national security and defence may only list 25 percent.

For other companies, the new limit is 30 percent of shares for any company wishing to make a new placement, down from 35 percent.

The ruling would strongly encourage Russian companies to raise capital at home, supporting President Dmitry Medvedev's ambition to make Russia a major financial centre by 2020.

"These shares can and must trade at home," Vladimir Milovidov, head of the watchdog, the Federal Financial Markets Service, told Prime Minister Vladimir Putin in a conversation televised on the Vesti news network.

"We have all the conditions in place to ensure that these shares are traded in roubles, in Russia," he said.

For the global stock market, however, it may put an unexpected brake on new stock offers expected in the second half of the year, analysts said.

MECHEL TO PROCEED

The ruling provides regulatory back-up for a law adopted in May, spelling out which assets are off-limits to foreigners [ID:nL05146804].

The rule applies equally to all types of shares, the regulator said, meaning that a company subject to the 30 percent cap which has issued both ordinary and preferred shares may float no more than 30 percent of ordinary shares and 30 percent of preferred shares on foreign markets.

The new rules do not apply to companies already listed abroad, and those that already have regulatory clearance to list more stock than is allowed under the new rules.

But the caps could put a hold on the pipeline of public offerings due in the second half of the year, made up overwhelmingly of metals and mining companies.

The first stock float to hit the market this half of 2008 -- a secondary placement of 35 percent of steelmaker Mechel's preferred shares -- will proceed unaffected by the new ruling, sources close to the placement said.

Consultancy PBN estimated this week that stock offers from Russian and the former Soviet countries of the Commonwealth of Independent States are expected to reach $20 billion this year, largely thanks to a spate of metals IPOs in the second half [ID:nL0724571]. (Writing and additional reporting by Melissa Akin, editing by Will Waterman)