Russian stocks in spin after arrest

RUSSIA'S stock market and currency suffered a mauling today on fears that the arrest of Mikhail Khodorkovsky, chief of oil giant Yukos, may lead nervous investors to pull money out of the country.

Moscow's leading stock exchange, Micex, tumbled 11.5% while the rouble fell to 30.05 per US dollar, from 29.92 on Friday. Shares in Yukos slumped almost 19% and trades were halted for an hour.

Khodorkovsky was arrested on Saturday night and charged with fraud, forgery and tax evasion. He can be held for up to two months while prosecutors decide whether or not to proceed.

The US ambassador to Russia, Alexander Vershbow, has warned the arrest 'could negatively affect Russia's investment climate' and 'raise new doubts among both foreign companies and potential investors'.

President Vladimir Putin failed to soothe investor jitters, saying he would not discuss the matter with big business leaders. He called for calm over the affair.

BP said it remained committed to its business plans for Russia, adding that Khodorkovsky's arrest had no bearing on its joint venture with Russian oil company TNK. 'We're in Russia for the long term. We're not into short-term, knee-jerk reactions,' a spokesman said.

The arrest follows an investigation into Khodorkovsky, one of the country's so-called oligarchs, which he says is politically motivated. Along with Chelsea football club owner Roman Abramovich, and others, he enjoyed great power and influence under former President Boris Yeltsin.