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Court to rule on Russian mogul
July 23, 2003

MOSCOW, Russia (Reuters) -- Russia's stock market opened down on Wednesday, fearing a sell-off if a court rules to keep a key shareholder of oil giant YUKOS in jail in a standoff with Kremlin political forces.

Renaissance Capital head of trading Pavel Naumenko said investors, rattled by the unexpected assault on a blue chip firm, were inclined to sell the stock and predicted a major sell-off if Platon Lebedev was not released at the request of his lawyers on Wednesday.

YUKOS shares, which have seen huge losses since the onset of the affair, were quoted 3.2 percent lower at $11.10 by 0845 GMT.

Stock market speculators bought YUKOS stock this week, betting Lebedev, who was detained on July 2 on charges of theft stemming from the 1994 privatisation of a fertiliser firm, would be released.

"If the decision is positive it won't ease tensions. We are only talking about an appeal on the conditions of his detention. The court will not hear his case. They won't just throw the case out," Naumenko said.

Lebedev's detention marked the beginning of public conflict which YUKOS chief Mikhail Khodorkovsky -- Russia's richest man who is seen as the real target of the action -- says was launched by a Kremlin faction aligned with the security services.

Lebedev's lawyers were due to press for his immediate release at a Moscow district court hearing.

The affair has led to a sharp decline in the share price of YUKOS and rattled investors who had been enjoying a rare period of political calm and post-Soviet growth.

A YUKOS source told Reuters: "Lawyers will appeal against the legality of the arrest. If it is ruled to be illegal then Lebedev must be released immediately."

In a separate court hearing scheduled for later on Wednesday YUKOS lawyers were also due to press complaints over a search by armed police at the company's premises on July 11.

Even if Lebedev were released, however, analysts said it would not necessarily mean the end of the action against him or YUKOS which business leaders has said has badly damaged Russia's investment climate.

The legal tussle has raised prospects of selloffs in Russia's post-Soviet carve-up of state assets in the 1990s, which turned a handful of businessmen into billionaire "oligarchs", coming under the spotlight of police investigation.

But many analysts say the action targets Khodorkovsky who has thrown his support behind the liberal opposition to President Vladimir Putin who is almost certain to run in next year's presidential election.

Other analysts say the action reflects a complex power struggle in the Kremlin between a liberal faction of remaining allies of former president Boris Yeltsin and Putin's new backers with roots in the security forces.

Business leaders have called on Putin to step in to restore calm by ensuring the rule of law prevails and safeguarding post-Soviet economic gains.

Putin however has said little about the case, but has criticised as excessive the detention of suspects in economic crimes.

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