The price of Urals crude fell below $50 per barrel on Thursday for the first time since early 2007, sinking Russian stocks and putting additional pressure on the ruble as the government struggles to balance the budget.

Meanwhile, confusion dominated the MICEX stock exchange, as an order from the government watchdog commanding a resumption in trading contradicted an announcement earlier by the exchange that it would stay closed until Monday.

The MICEX Index fell as much as 17 percent before the halt, only to recoup some of the losses later in the day to close down 8 percent.

Plunging oil prices and shaky investor confidence have led to Russian stocks shedding more than $1 trillion dollars during Dmitry Medvedev's presidency, investors said.

The dollar-denominated RTS exchange said the capitalization of the stocks it handles has fallen more than $1 trillion to $385 billion since a market peak on May 19.

"Things are as bad as they possibly could be: The Russian market no longer functions," said James Beadle, an asset manager at Pilgrim Asset Management, which invests in stocks and bonds.

"The main reasons are obviously what is going on globally, particularly with commodity prices, and political issues within Russia," Beadle said.

As capital flight and the global credit crunch have drained investor confidence, the bourses have responded with frequent trade suspensions to the consternation of many funds, which have difficulties reporting net asset value to their investors.

The MICEX, the country's most liquid index, was halted from late Tuesday, and activity resumed Thursday only to be stopped again after 35 minutes.

The exchange said Thursday that the suspension would last until Monday or an order from the markets watchdog, which then commanded a resumption after just one hour.

Half an hour later, the MICEX announced a one-hour suspension, followed within moments by an order from the watchdog for trade to continue uninterrupted.

"The decision was taken in order to synchronize the trade of stocks on Russian bourses," said a watchdog representative, referring to the dollar-denominated RTS, which remained open for most of Wednesday.

The sharp fall on the MICEX was in part due to its playing catch-up with Wednesday's 12.5 percent sell-off on RTS, as well as with London-listed Russian companies, which lost 17.6 percent while the MICEX was closed.

Rosneft, the country's biggest oil producer, led the decline as crude for December delivery traded near a 21-month low in New York. Urals blend crude traded at $48.80 to $48.90 a barrel, its lowest since January 2007.

The government says its budget can be sustained on $50 oil next year, as it can resort to the use of gold and forex reserves.

The Central Bank reported on Thursday a $9.2 billion drop in reserves, which are now down about $120 billion since their August peak, mainly on the back of heavy interventions to support the ruble.

(Reuters, Bloomberg)