"Investors hope to retain this year's gains through the end of the year, clearly expecting economic growth to reaccelerate in 2013," Slava Smolyaninov, strategist at Uralsib Capital wrote in a note. The Russian rouble firmed 0.4 percent against the dollar, while Brent crude climbed above $109 per barrel on hopes that US lawmakers would come up with a last-minute deal to avert the looming fiscal crisis.
Month-end income tax payments due on Friday were also a factor as Russian exporters normally step up the conversion of foreign currency. Overnight money market rates fell to their lowest level in two weeks at 6.2 percent, as traders expect an inflow of budget funds toward the year-end.
The rouble rose 0.4 percent to 40.39 against the euro. The Russian currency was also 0.4 percent stronger at 35.0 against its euro-dollar basket. Trading in Moscow was expected to remain quiet on Wednesday, while European markets are closed. However, Wall Street will reopen after a Christmas break. Stocks in Russia's Gazprom, whose weight in the MICEX index is at 15 percent, were up 0.1 percent.
Russia's top gas producer plans to increase dividends over the next few years, however falling European pricing and deeper problems brought by a boom in US shale production holding back the shares. Shares of Magnit - Russia's retailer and the strongest performer with the gains of over 70 percent this year so far - shed 0.4 percent. "I think that Magnit is a safe story for 2013 investments, while markets remain volatile. Magnit is one of the strongest retail companies in emerging markets," said Natalia Smirnova, an analyst at Deutsche bank.
J.P. Morgan included Magnit in its CEEMEA strategy top 10 list for the year ahead, expecting further margin expansion of the retailer in the fourth quarter. Steady economic growth and resilient consumer spending in Russia should make stocks such as retailers and homebuilders good investments for the coming year in a rising stock market, a Reuters poll showed earlier in December.
"The beginning of next year will be difficult. The United States will reach another debt ceiling. For the market to remain at current levels US lawmakers should prevent the fiscal cliff before the year-end," said Ovanes Oganisyan, strategist at Sberbank CIB. US President Barack Obama is expected to tackle "fiscal cliff" negotiations with the Congress on Wednesday, ahead of a year-end deadline that would trigger harsh spending cuts and tax hikes.