Russian Prime Minister Vladimir Putin has said that the Russian government has set aside $6.7 billion to buy up battered stocks, and an equivalent amount to invest in stocks next year as tumbling stock markets in the recent weeks has seen the Russian market losing $615 billion of value since May leading to a crisis of confidence between banks, resulting in freezing of credit lines for Russian companies.

Additionally a $36-bailout for banks was passed by the Parliament on Friday where the central bank will give $18 billion of subordinated long term loans apart from the government lending another $18 billion to private commercial banks, where they in turn will start opening credit lines to companies in order to maintain growth.

Another $50 billion of state money will be given to banks and companies needing to refinance foreign debt via state owned Sberbank and VTB.

Putin also said that bank deposit guarantees would be extended to 100 per cent of the first 700,000 roubles ($26,760), which is equivalent to approx 40 months wages in Russia. Earlier the authorities had guaranteed deposits of 400,000 roubles, with the first 200,000 roubles covered fully and the rest covered by 90 per cent.

Putin, who is also the chairman of Development Bank, known as the Vneshekonombank (VEB), told reporters outside his home in Moscow that Development Bank would start placing funds in Russian shares, not foreign shares, next week." He also said that the up to 175 billion roubles ($6.7 billion) would be placed this year and another 175 billion roubles next year.

The amount of $6.7 billion to strengthen the stock market is slightly lower than $8.9 billion, which Putin had earlier promised in September.

The government's plan of buying of shares will begin after the weekend with probably investing first in Russia's largest listed companies, such as natural gas supplier Gazprom, oil company Rosneft, VTB Bank and the Alrosa diamond miner where it holds considerable amount of stake.

The US treasury secretary, Hank Paulson has also said that the US government would buy shares in banks and other financial institutions, including insurance companies.

These measures were in response to requests from politicians and financial experts to invest state funds in domestic as well as foreign securities. ''Taking into account what's happening on Western markets, I think these demands are justified,'' he said.

The move also comes after Standard & Poor's put major institutions like Alfa Bank, Troika Dialog, UralSib and 10 other Russian banks on negative outlook.

Putin said, "Up to $50 billion is being earmarked to refinance borrowings made by Russian companies abroad," and on the $36 billion subordinated loans to major Russian banks, he said "These funds will be used to increase banks' capitalization and to solve liquidity problems."

In recent months, investors have pulled billions of dollars out of Russia on fears over the global financial crisis, tumbling oil prices and heightened domestic political risk and this bailout seeks to stem the biggest financial crisis in more than a decade.

The former KGB colonel, Putin, has also banned Russian television stations from highlighting the domestic financial crisis and asked them to avoid the use of words such as ''financial crisis'' and ''collapse.'' Officials have explained that this was done as to not cause widespread panic.

Recently it imposed a blackout on the negative speech given by the finance minister, Alexei Kudrin.

At a communist party meeting, Putin led a stinging attack on the US by echoing British chancellor Alistar Darling's charge of irresponsibility and starting the global financial crisis with absolutely no regulation, and called for changes in the global financial system.

Putin said "Trust in the United States as the leader of the free world and the free economy, and confidence in Wall Street as the centre of that trust, has been damaged, I believe, forever," and added that "There will be no return to the previous situation."

Russia's bailout money is coming from the national savings account which has swelled because of the global surge in oil prices while in the US the bailout funds are through borrowings that will raise the national deficit.

The extraordinary rise in oil prices has created a buffer for the Russian economy, which has enabled the authorities to prop up the financial sector with this readily available cash but the Russian finance minister has said that the budget will go into deficit and savings will be at risk if oil prices drop below $70.

On Friday, the price of oil fell almost $5 to an intra-day low of $84.19 a barrel, the lowest level since October 2007. In late afternoon, oil was down $4.14 to $84.81 a barrel in New York.

Moscow's benchmark Micex Index of 30 stocks fell to a three year low of 700.37 and has lost has lost 64 per cent from a high since May this year.

Russian equities rallied on Thursday after tumbling earlier this week, with oil and gas shares leading the rally and forcing Moscow's stock exchanges to suspend trading again.

On Thursday, the dollar-denominated RTS stock index rose 11 per cent to end at 844.75 points. It was the steep surge in shares this time that forced the RTS exchange to suspended trading. Trading was also suspended on the Micex exchange as the Micex stock index rallied 10 per cent Thursday.

In order to stop the huge fluctuations in trading sessions, the Moscow's bourses did not open on Friday which evoked anger among the investors where trading has become increasingly unpredictable in recent days, with daily trading suspensions of the markets by its regulator.

Russian Global Depositary Receipts (GDRs) fell in line with a collapsing global stock market on Friday even as Putin announced the government intention of buying shares to support the market.

The Russian government's bailout, like the US and the UK bailout has not been able to ease the nervousness and jitters among investors as foreign investors have continued pulling out their money from Russia and the local market has responded by panic selling.

Some commentators in Russia feel that the investment in shares which are a part of Russia's $210 billion market rescue package will not have any effect until confidence returns to the global financial market which will ultimately stabilize the market.

Russian central bank reported on Thursday that its international reserves fell by $16.7 billion and stood at $546.1 billion during the week ended October 3, accounting for a decline of $51.2 billion from a reserve of $597.3 billion as on August 1, 2008. The Russian government has the world's third largest foreign currency reserves.