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Russian stock market tumbles on Georgian war

MOSCOW - Russia's stock market dropped to a 22-month low on Monday after Russia expanded its military confrontation with Georgia over the separatist region of South Ossetia.

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The MICEX index was down 3.2 percent to 1,315.79 by 1 p.m. local time (0900 GMT) its lowest level since October 2006. The RTS benchmark dropped 3.4 percent.

Shares for Russian major car maker AvtoVAZ fell the furthest, losing 7.5 percent of their value on Monday. The country's largest lender, Sberbank, lost 4.3 percent. Natural gas company Gazprom was down 2.5 percent.

The drop continued a strong selloff from Friday, after Georgia launched an offensive to retake the separatist region. Russian responded by sending in troops and has since expanded bombing to other areas of Georgia.

The RTS slumped 6.5 percent on Friday to hit its lowest point since November 2006.

Russian stocks had already been struggling in recent weeks, amid a shareholder dispute over the BP-TNK oil joint venture, and after Prime Minister Vladimir Putin accused mining Mechel of price fixing. Mechel's shares fell by roughly halof after the comments.