Equities wilt under fire.(Stock markets)(petroleum stocks)

The RTS index surged to a high of 607 points on 19 July, but swiftly fell back again on reports that bailiffs in Russia plan to sell Yukos' key production asset, Yuganskneftegaz, at a knockdown price (see p1).

The index sank back below 600 points later in the week under the deluge of negative stories surrounding Yukos. It finally ended the week down by 2pc at 576 points, and seems to be fast returning towards its year low of 533 points.

The sovereign bond market, as a measure of general appetite for Russian risk, has picked up the slack from the panicked equity markets. The spread between US and Russian long-term bonds has blown out in recent weeks, to 260 points, up from a low of 150 earlier this year. And a rise in interest rates reflects both concerns about the Yukos affair as well as the country's recent mini-banking crisis.

Yukos' shares dipped below $5.75 during the week--the lowest level since January 2002--although they bounced back slightly. The market has been pricing in bankruptcy risk at $6/share for some time, although it is unclear what value …