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UPDATE 1-World Cup lifts Russian shares to post-crisis peak

Published 12/03/2010, 11:46 AM
Updated 12/03/2010, 11:52 AM

* RTS hits 1,692 -- highest since August 2008

* MICEX posts highest reading since July 2008

* Steel companies surge on World Cup construction boost

* Wimm-Bill-Dann extends rally after PepsiCo buys stake

(Adds analyst comments, share price moves)

MOSCOW, Dec 3 (Reuters) - Russian shares on Friday hit their highest level in more than two years as steel and real estate stocks rallied in anticipation of construction demand for the 2018 soccer World Cup.

The dollar-denominated RTS index closed up 1.3 percent at 1687.3, completing its best weekly showing in half a year. Earlier in the day it reached 1,692.52, its highest point since Aug. 25, 2008, according to Reuters data.

The rouble-traded MICEX completed a three-day rally of more than 5 percent to 1649.7 -- it's highest since late July 2008, when stocks began tumbling amid the financial crisis that plunged Russia into recession.

"The market rally has been in part driven by global trends -- there has been some relief over the European sovereign debt issue ... We also received the good news that FIFA has awarded the World Cup to Russia -- that has helped to galvanise things," said Alexander Kantarovich, strategist at JP Morgan in Moscow.

Russia was named World Cup host on Thursday, potentially opening the door to billions of dollars of infrastructure investment, an image boost and hoards of tourists.

"Russian steel companies are likely to benefit from the World Cup because of the need to upgrade rail, road and airport infrastructure in the 13 cities where the games will be held," Citigroup said in a note.

On the RTS, Mechel added 5.8 percent, Novolipetsk Steel gained 10.3 percent, MMK rose 7.4 percent and Severstal moved 2.2 percent higher.

"We estimate that the active stage of 2018 FIFA World Cup infrastructure development could take four years (2014-2017), resulting in a 3-3.5 percent increase in domestic annual steel consumption over the period," Boris Krasnojenov, analyst at Renaissance Capital, said in a note.

VTB Capital estimates the World Cup preparations could cost $20 billion, with companies in construction and tourist services -- from restaurants to airlines -- also set to benefit.

Housing developer LSR added 4 percent while Russian flag carrier Aeroflot gained 2.7 percent.

Another standout gainer was Wimm-Bill-Dann, rallying for a second day on news that PepsiCo plans to snap up 66 percent of the juice and dairy major for $3.8 billion in the biggest foreign acquisition in Russia outside the energy sector.

Wimm-Bill-Dann shares were up 21.43 percent on RTS, with investors hoping the deal could also pave the way for more foreign investment and interest in the consumer sector.

(Reporting by Andrey Ostroukh, Toni Vorobyova and John Bowker; Editing by David Hulmes)

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