In a surprise move, which reverberated across the international community, Russia issued a four billion euro state loan to Iceland. The statement on Russia's central bank website reads that the loan maturing in three-four years and an interest rate as low as 30-50 basis points above Libor has been given the green light by prime minister Vladimir Putin.

The news comes as the Icelandic government has been rocked by the gloom of looming state banktuptcy, with its second-largest bank Landsbanki nationalised, and as Russia has opened its state reserves to bail its banking system out, Kremlin itself has received calls for aid from its top four energy giants and seems unable to stop its stock markets' nosedive.

Russia's finance ministry originally denied the news. Hours later, however, Russian finance minister Alexei Kudrin admitted Russia had indeed received a loan request, had been reviewing it and had been positive about it because Iceland was a country abiding by strict fiscal discipline.

Analysts surveyed by Reuters news agency expressed strong doubts about Russia's reasoning behind the move and said the loan was the country's means to restore its reputation as a global factor.

In the meantime, Russia announced it would issue cheap loans worth 950 billion roubles ($36.7 billion) to its ailing state financial institutions. The money will be disbursed within a five-year timeframe and the main beneficiaries will be Russia's top two banks, Sberbank (500 billion roubles of the total) and Vneshtorgbank (200 billion roubles).

The bailout, which comes on top of a $180 billion governmental rescue plan, was a measure agreed at a meeting between the Russian government and the country's leading bankers.

Russia's finance minister also spelled intentions to request parliamentary approval to open the state gold and foreign currency reserves to implement a so-called preventive intervention and avert a crisis scenario. In September, the Russian reserves were down $25.6 billion to $556 billion.

It arrived at a time when the Russian stock market has been living through record lows, posting the worst losses worldwide and working under intermittent trade.

"Presently, there is nothing rational in Russia's stock trade," Uralsib analyst Chris Weafer was quoted by Reuters as saying.

On October 7, even Russia's gas giant Gazprom shed 25 per cent of its market capitalisation and Russian brokerage Troika Dialog estimated that the present market capitalisation of country's top four public oil companies was tantamount to that of Brazil's oil company Petrobraz.

Also on October 7, Russia's top energy companies called on Kremlin to loan-finance them, Bloomberg newswire reported. Oil company LUKoil's president Vagit Alekperov has been the mastermind of the initiative taken up by his company, Gazprom, Rosneft and TNK-BP and has presented the request to Russian president Dmitry Medvedev. The companies' executives were said to have received a positive answer.

In the meantime, Gazprom executive Alexander Medvedev urged OPEC, the US and Western European governments to stem the slide of oil prices or else Russian oil companies would suffer a huge blow.

Should crude continues to lose value, Russia may cut its oil supplies for the first time in a decade, analysts were quoted by Bloomberg as saying.