The ruble-denominated MICEX exchange was down 3.4 percent to 982.2 points at 3:20 p.m. (1120 GMT). It fell by 1 percent within the first 15 minutes of opening, and was down by nearly 7 percent within an hour of resuming trade at 12:30 p.m. (0830 GMT).

The dollar-denominated RTS _ which first opened for trading only at 12:30 p.m. _ sank by 2.1 percent to 1,169.7 points.

State-owned oil major Rosneft plunged 5.3 percent and oil firm Lukoil lost 4.3 percent as oil prices dropped overnight to below US$100 a barrel. Mining company Norilsk Nickel lost 7.7 percent while state-controlled VTB bank declined by 2.2 percent. Sberbank, the largest state-owned lender, reversed earlier declines to gain by 3 percent.

The U.S. House of Representatives narrowly voted against a massive US$700 billion bailout plan for financial institutions Monday in the United States, triggering a stock selloff in the U.S. and Asia. The Dow Jones Industrial Average plunged 777 points on Monday, its biggest-ever one-day fall.

Renewed problems on Wall Street and sliding oil prices pushed Russia's stock markets into their steepest decline in a decade earlier this month, resulting in a two-day shutdown of trading. The stock market rout contributed to a collapse in confidence among lenders, pushing the government into action. It has poured billions of dollars already into the banking and financial systems in an effort to ease liquidity concerns after banks stopped lending to one another. It has also promised billions more dollars in additional relief.

While investors say the packages have helped fend off panic, Russian markets have seesawed along with global indexes in recent days.

"In an environment of tight global liquidity, Russia belongs to the countries that's most susceptible to market volatility because Russian corporates have been very active in international borrowing," said Ralph Sueppel, head of economics and strategy at London-based Bluecrest Capital, which has US$2 billion invested in emerging markets.

Russia's stock market, which earlier this year was one of the world's most robust and lucrative, has been in a steep decline for weeks, reflecting not only the turmoil in international markets but also fears sparked by high-profile corporate conflicts and Prime Minister Vladimir Putin's public assault on Mechel, a steelmaker, for alleged price fixing. Russia's war with Georgia in August was for many investors the last straw, prompting roughly US$7 billion in net capital outflow in just two days.

"Globally, investors are running from risk," Moscow-based UralSib bank said in a note to investors. "With the price of crude crashing back ... plus worries about the outlook for stability within the country's financial system, Russia is firmly in that category."

Meanwhile, President Dmitry Medvedev sought Tuesday to strengthen his credentials in battling corruption _ a major deterrent to long-term and strategic investors.

"Corruption ... has become commonplace and it characterizes all life of Russian society," Medvedev said in comments reported by Interfax, touching on a theme that has been a hallmark of his five-month presidency. "We are not talking just about bribes, but about a grave illness, which is eroding our economy and the whole of society."

While Medvedev has spoken out in the strongest terms on the issue of property rights and his commitment to reform of the judiciary, critics claim he has done little to combat the problem.