Russian Stocks Fall Most Since 2008 as Security Council Meets

(Bloomberg) — Russian stocks tumbled the most since 2008 as Russian President Vladimir Putin said he’s considering an appeal for official recognition from separatists in east Ukraine.

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The benchmark MOEX Russia Index slumped as much as 14%, while the dollar-denominated RTS Index slid 17%, making it the worst-performing gauge in the world on Monday. While all stocks slipped, Gazprom PJSC and Sberbank PJSC pressured the index the most, falling more than 15% each.

Meanwhile, the Finance Ministry axed Tuesday’s bond sale, citing “increased volatility on financial markets” as yields on 10-year ruble notes surged almost 70 basis points. The Russian currency sank as much as 3% per dollar, the biggest drop globally.

“Volatility is high because uncertainty still rules,” said Cristian Maggio, London-based head of portfolio strategy at TD Securities. “In the case of armed conflict, Russian assets will weaken substantially more than now.”

Russian state television showed a specially called Kremlin meeting of Putin’s Security Council to discuss the issue just hours after the military said it had killed five “saboteurs” and destroyed two Ukrainian armored personnel carriers that crossed into Russian territory. Kyiv denied the claim.

A move to recognize the separatists would likely torpedo European-mediated peace talks and further escalate tensions with the West.

READ: Kremlin Cautious on Prospect of Biden-Putin Summit Amid Tensions

Moscow continues to deny it plans to invade Ukraine, though the U.S. and its allies have disputed that.

Earlier, risk assets globally reversed gains after the Kremlin threw into question the fate of a French proposal that seemed to offer fresh hope for averting an alleged Russian plan to attack Ukraine.

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The cost of insuring Russian debt has spiked to the highest level since 2016, credit-default swaps show. Derivatives traders braced for further declines with one-month risk reversals showing the most bearish bets on the ruble since February 2015.

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