* Medvedev pledges extra $36 billion for Russian banks
* Move fails to rally Russian stocks
* Russia confirms talking about loan to Iceland
* Oil firms seek state funds, tycoon scraps asset split
By Gleb Bryanski and Michael Stott
MOSCOW, Oct 7 (Reuters) - President Dmitry Medvedev announced an extra 950 billion roubles ($36.4 billion) of long-term help for banks at an emergency Kremlin meeting on Tuesday, but failed to rally Russian stocks.
“The whole point of our work is to make decisions as quickly as possible,” Medvedev told reporters. “Speed is now priceless.”
Russia, which has large foreign exchange reserves and is rich in oil, gas and metals, had looked among the better placed nations to withstand the global financial crisis but Moscow has been among the worst affected markets.
In a surprise move, Iceland said it wanted Russia to extend a 4-billion euro ($5.4-billion) loan from its huge reserves to strengthen the Nordic island’s currency.
Finance Minister Alexei Kudrin said Moscow viewed the request “positively” and would make a final decision on it after negotiations with Icelandic officials.
Kudrin also said the extra funds for banks, offered for periods of at least five years, would help ease the credit crunch by allowing banks to lend over long periods.
Of the money, 500 billion roubles would come from the central bank and the rest from the state budget, he said. Much of it would be funnelled via state savings bank Sberbank SBER03.MM.
The crisis meeting took place in the Kremlin one day after Russian stocks suffered their heaviest one-day falls. The dollar-denominated RTS index .IRTS collapsed by 19.1 percent as panic gripped the market and investors fled to safe havens.
Tuesday’s bailout sparked a brief stock market rally but it quickly petered out and Russian shares touched new three-year lows. The rouble-based MICEX index .MCX closed 0.96 percent down at 744 points, and the dollar-based RTS ended the day 0.95 percent down at 858 points.
“The measures are certainly having a positive impact on the margin — every time they announce more measures you see the market rebound but ultimately it is not in the hands of the domestic authorities,” said Ivailo Vesselinov, senior EEMEA economist at Dresdner Kleinwort in London.
“Given the uncertainty with regard to the banking sector everywhere, there is so much uncertainty and so much risk aversion that there is no appetite for anyone to consider even markets such as Russia which appear to be oversold.”
Holder of the world’s third biggest foreign exchange reserves, almost free from sovereign debt and sitting on a huge stream of hard currency earnings from oil, gas and metals, Russia has an enviable cash flow.
Dipping into its wealth, Moscow has already unveiled a $180-billion rescue package ranging from liquidity injections and tax cuts to the possibility of using budget funds to buy shares.
But with an economy heavily dependent on raw material exports, and market sentiment on Russia damaged by the August war with Georgia and government moves deemed anti-business, Moscow has been badly affected.
Sharp falls in the price of oil and major metals have hit leading Russian companies as fears grow that a global recession means lower demand for energy and commodities.
The financial strain of the bailout and of supporting the rouble is starting to show. Russia’s central bank said on Tuesday that its reserves fell by $25.57 billion in September to $556 billion.
Traders said they saw the central bank again supporting the rouble on Tuesday, selling some $4 billion, on top of dollar sales of about $5 billion the previous day.
Even Russian oil companies appeared to be feeling the pain. Benchmark Urals crude slipped to $81.52 a barrel URL-E.
LUKOIL (LKOH.MM), the country’s biggest private sector oil company, said it and three other big energy firms including Gazprom were seeking loans from the government to help them refinance debt and buy new assets abroad.
Analysts say a number of major Russian oligarchs have financed expansion via loans guaranteed against the stock of their companies, making them vulnerable to a market collapse.
In a sign that such deals might be scrapped, tycoon Mikhail Prokhorov told former business partner Vladimir Potanin he would pull out of an asset split deal, citing force majeure, a spokesman for Potanin’s business unit said.