Russia’s battered stock exchanges remained closed yesterday as President Medvedev ordered the Government to pour billions of pounds into saving the financial system.

He told ministers that there was “no more important task” than stabilising the markets after a torrid week that has seen share prices slump and brought warnings of a financial crash.

“This is our top priority,” Mr Medvedev said in remarks broadcast on national television. “Obviously, the crisis on the world financial floors is more profound than the most pessimistic earlier forecasts.”

He urged ministers to inject another 500 billion roubles (£11.1 billion) from the state budget into the markets and pledged that the financial system would receive “all necessary support”. But the dollar-denominated RTS exchange and the larger Micex market, which trades in roubles, were ordered to stay shut.

Alexei Kudrin, the Finance Minister, said that the markets would reopen today after three days of interrupted trading during which share values plummeted. The RTS fell 11.47 per cent and the Micex 17.45 per cent on Tuesday in the worst day since Russia defaulted on its foreign debt in 1998. Micex, where most trading takes place, has fallen 25 per cent this week and has lost 56 per cent since its May peak.

Officials at Micex described conditions in the Russian markets as “extraordinary”. Mr Kudrin said an extra 60 billion roubles would be placed in Russia’s three biggest banks, VTB, Sberbank and Gazprombank, to improve liquidity.

He promised to auction up to 200 billion roubles today for one week, in addition to the two placements already this week totalling 268 billion rubles.

Mr Kudrin said that the Government would buy securities on the stock market if shares remain undervalued for an extended period. He also announced a cut in oil export duties of more than 20 per cent, a multibillion-dollar injection to ease the pain of recent falls in the oil prices – the mainstay of Russia’s recent economic boom.

The central bank also cut reserve requirements for banks by four percentage points, releasing 300 billion roubles. Sergei Ignatiev, its chairman, said: “We hope that banks will spend these funds not on long-term crediting or other kinds of crediting of clients, but on the maintenance of the necessary volume of their liquidity and on making settlements.”

The bank said Russia’s foreign reserves had fallen by $13.3 billion (£7.3 billion) in the week to September 12, to $560 billion. The oil-fuelled transformation in Russia’s fortunes since the 1998 crash means that the Government has the world’s third-largest foreign reserves and almost no debt.

However, banks and traders remained nervous about the outlook with uncertainty in the global market, falling oil prices, and international tensions between Russia and the West over Georgia.

Hawk Sunshine, head of investment banking at Metropol investment bank, said: “Everybody’s sitting on a lot of cash but nobody wants to lend it to anybody else.”

Roland Nash, head of research at Renaissance Capital, an investment bank in Moscow, said: “The market doesn’t like it when exchanges are closed. It is obviously going to go down when they open it again.”

Ron Smith, chief strategist at Alfa Bank, said that there would be real slowdowns in the real economy, particularly in real estate and other sectors that rely on debt financing.

Massive package to calm the markets

— President Medvedev has pledged £11 billion to support the Moscow stock market

— Sberbank, VTB and Gazprombank will lend 60 billion roubles to stock market participants, effectively offering defacto state support for troubled brokerages

— Trading halted on the RTS and Micex stock exchanges from about noon on Wednesday until this morning

— Central bank has slashed banks’ reserve requirements by four percentage points to free up an additional 300 billion roubles

— Short-selling and margin-trading banned until further notice

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