MOSCOW, July 25 (Reuters) - Turmoil on world capital markets is likely to thwart Russia's biggest privatisation of the year, a government official said on Thursday, but the head of the privatisation agency said the sale goes on.
Russia plans to float six percent of top oil producer LUKOIL
within a week, but the official, who requested anonymity, said tumbling markets put the plan under threat.
"(Yesterday's market price) was $14. It is a bit too low," the official told Reuters. "Under the current conditions the probability of a postponement is quite high."
But the state property fund said it was still ready to go ahead with the float on the London Stock Exchange.
Vladimir Malin, head of the fund and the government's privatisation agent, said the placement price would be set by July 31, the date mentioned as the target for the stock float in which the LUKOIL shares will be placed as American Depositary Receipts.
"The marketing campaign, part of the roadshow, is going according to plan, and a decision will be made on the placement price no later than July 31," Malin told Reuters.
LUKOIL management and state property administrators are on a roadshow in London to promote the float.
The official's remarks had sent LUKOIL's local shares up to $15.05 from $14.54 in a matter of minutes but then fell back to $14.56 after Malin said he expected to set the price soon.
At 1100 GMT, the share was trading 2.75 percent up from the previous close.
The government, which would be left with around eight percent of LUKOIL's stock after the float, has said it needs to net $660-$800 million from the stake sale.
At yesterday's closing price of $14.17 the float would have brought in little more than $700 million.