Russia's stock exchanges suspended trading yesterday as panic selling sent the value of shares plummeting.

The rouble-denominated Micex fell almost 18 per cent to 888.17 points, its largest percentage decline since the meltdown triggered by Russia's financial default in 1998.

Officials suspended trading for an hour in an attempt to halt the crash, but selling resumed as soon as the market reopened.

The dollar-denominated RTS index also suspended trading for an hour. It ended the day down by 11.47 per cent at 1,131.12, its lowest for two years. Interbank lending rates shot up to11 per cent, their highest since 2004, compared with 8 per cent on Monday and 4.5 per cent before last month's conflict with Georgia.

Banks and energy companies were hit hardest as shareholders ignored claims by Alexei Kudrin, the Finance Minister, that Russia faced no “systemic” crisis. The panic was blamed on falling oil prices, a key element of Russia's economy, and global uncertainty over the banking system.

Shares in the state-controlled VTB Bank plunged almost 30 per cent and those in Sberbank fell by nearly 22 per cent on the Micex. The RTS index suspended trading in Sberbank common shares for an hour after the price fell more than 13 per cent.

Rosneft, the oil giant, fell 19.1 per cent, while shares in Gazprom, the gas monopoly, dropped 17.2 per cent. The RTS has lost half of its value since mid-July; the Micex has fallen 55 per cent since May.

Liquidity in the money markets virtually dried up, despite Russia's central bank pumping a record 361 billion roubles (£7.9 billion) into the financial system, along with 150 billion roubles from the Finance Ministry.

Vladimir Putin, the Russian Prime Minister, sought to calm the markets, saying: “The Finance Ministry plans to more than double this sum and offer 350 billion roubles tomorrow. We don't have any doubts that the safety cushions that have been placed in the Russian economy in the past several years will work.”

Market traders were not reassured. Vadim Soskov, at Kapital Asset Management, said: “This is a systemic crisis. The Russian investors who are leaving the market are afraid to go back.”

Stanislav Yarushevichus, head of trading at ING in Moscow, said: “Every day, banks who credit each other are becoming fewer and fewer ... The more money the central bank pumps in, the faster money leaves the country.”

Mr Kudrin said last week that the Government could intervene to support the stock market, with Russia's pension fund and National Wealth Fund, but the Kremlin backed away after Standard & Poor's, the credit ratings agency, strongly criticised the proposal.

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