Yukos shares soar as Putin promises to support oil firm

President Vladimir Putin said yesterday that the Russian government would try to prevent the huge Yukos oil company from bankruptcy, sending shares in the firm soaring a day after its former chief executive went on trial for massive tax evasion and fraud.

"The official authorities of the Russian Federation - the government, the economic authorities of the country - are not interested in the bankruptcy of a company like Yukos," Mr Putin said of Russia's biggest oil firm, which has endured a year-long legal onslaught.

Supporters of Yukos founder Mr Mikhail Khodorkovsky, who is Russia's richest man, say the case against him is part of a Kremlin-backed drive to crush his criticism of Mr Putin, quash his political ambitions and silence other dissenting voices.

With several top Yukos executives accused of financial and other crimes, the firm's management have urged the government to compromise over a demand for $3.4 billion (€2.8 billion) in tax arrears, which they say could drive the company into bankruptcy.

A Moscow court is expected to rule today on a plea by Yukos to unfreeze its assets, freeing up funds with which to pay its tax bill.

Mr Putin said the government would help if it could, but left a final decision to the judges.

"The government will do its best to prevent the collapse of the company," he said, before adding that "it is a different matter as to how this case develops in court".

Yukos officials say they are also willing to negotiate with the government over the possible sale of shares to a state-controlled company.

Analysts said there was nothing in Mr Putin's latest comments to suggest that Yukos would be let off having to pay a big tax bill. However, it seemed likely that the profitable oil company would be given time to raise the necessary funds.

Before Mr Putin's remarks, analysts had been expecting today's court hearing to accept a request by the tax ministry for Yukos to accelerate payment of the tax bill, raising fears that insolvency was imminent.

Trading in Yukos stock was suspended on the main Moscow bourse after surging 34 per cent to $8.32 on news of Mr Putin's comments. The whole index closed more than 10 per cent up on the surge in investor confidence.