Russian shares reversed steep losses and moved into positive territory after President Dmitry Medvedev said "a major part" of the operation to force Georgian troops out of South Ossetia had been completed, according to Thompson Financial.
At 5:11 p.m., the RTS index was up 11.19 points, or 0.65 percent, at 1,733.90, after hitting a low of 1648.53 in morning trade on concern the conflict will intensify. The rouble-denominated MICEX index rose 24.25 points, or 1.78 percent, at 1,383.87.
"As this week starts investors will be very focused on the events in the Caucasus, hoping for a quick cessation in hostilities and no broadening of the conflict," Uralsib chief equity strategist Chris Weafer wrote in a note to clients.
"In that event we can expect some bounce back from the oversold position of last week, i.e. assuming China and oil do not collapse further, as bargain hunters come in. But any bounce will be limited as investor sentiment towards Russia has been shaken by both the recent economic data and the indication that the government is actively looking at mechanisms to control the spiraling cost of materials and consumer inflation."
Oil producers were among the leading gainers, after the weekend fighting between Georgia and Russia halted crude exports from Georgia`s Black Sea ports.
New York`s main contract, light sweet crude for September delivery gained 1.50 dollars to 116.70 dollars a barrel.
Brent North Sea crude for September delivery advanced 1.79 dollars to 115.12 dollars per barrel.
Lukoil gained $1.80, or 2.36 percent, at $78.00, Rosneft rose $0.09 at $8.67, while gas and oil giant Gazprom gained $0.21 at $10.32.
Norilsk Nickel was one of the main decliners, falling $11.50, or 6.05 percent, at $178.50 as the mining conglomerate`s shareholders remained at odds over a range of management and strategy-related issues.
Vladimir Potanin on Friday succeeded in electing Vladimir Strzhalkovsky as new general director, despite objections from UC Rusal, which holds just over 25 percent of the company.
