Russian shares plunge

The benchmark RTS index plunged by 19.1 percent to 866.4 points, while the MICEX--where the bulk of trading takes place--fell by 18.7 percent to 752 points, the largest single loss ever for both. In a desperate bid to stop the bleeding, trading was suspended three times on MICEX and twice on the RTS--to little apparent effect.

The carnage continued a three-month slide. Since May, Russia's RTS has plunged by 64 percent--almost two-thirds, to its lowest level since August 2005.

"The mood is kind of disbelief. You'd think we would have gotten used to it by now," said Ron Smith, strategist at Moscow-based Alfa Bank. "Traders are just sitting there staring at the screens and going 'wow.'"

The sell-off began because of fears about growing government interference in business and the fallout from Russia's five-day war with Georgia. But these concerns were eclipsed in September by the carnage on Wall Street and tumbling commodity prices. Russia has seen its fortunes rise with the price of the oil and gas it exports.

The markets are in their worst slump since the 1998 financial collapse, when Russia defaulted on its sovereign debt, the ruble was devalued and banks faced widespread foreclosures.

Since mid-July of this year, investors have pulled out an estimated $50 billion from the country, analysts say. Now, it seems that almost no one is willing to buy.

With oil prices now heading south of $90 a barrel, fears are escalating over the global economic outlook. The government-aided rescues of several European banks and the passage of a $700 billion bailout plan in the United States failed to reassure anyone, it seems.

Russia now sits on the world's third-largest foreign exchange reserves, and has pledged more than $170 billion in support for the country's shattered banking system and stock markets.

While talk of collapse similar to the one in 1998 still seems far-fetched, neither is there much talk here these days--as there was a few months ago--of immunity to the global debt crisis.