Leading Russian and international newspapers yesterday slammed the blocking of a major stake in oil giant Yukos, saying the Kremlin was returning to Stalinist methods and destroying all prospects for business.

"Business can react to such a development only by shutting down. In a country where property rights are not respected, only illegal business is possible," said Russia's most respected business newspaper Vedomosti, warning that the whole of Russian business was now facing a real threat of nationalisation.

If President Vladimir Putin failed again to criticise the impounding of a 44 percent state in Yukos, it would be a clear sign that the Russian leader had decided to restore a Soviet-style authoritarian rule, the paper added.

"The president should open his eyes and finally discover that prosecutors are destroying in one day what took years to create."

Russian prosecutors froze a 44 per cent stake in Yukos owned by jailed tycoon Mikhail Khodorkovsky and his alliesin a dramatic escalation of a confrontation between the Kremlin and big business.

Mr Putin also replaced his chief of staff, Alexander Voloshin, deemed sympathetic to Mr Khodorkovsky, in another sign that Kremlin "hawks" were gaining ground in a drive to reassert state control and better control coming elections.

"A whiff of Stalinism is now polluting the Moscow air," said The Times of London, which added that the stock seizure could amount to nationalisation "by the back door".

"Putin's insistence that he cannot influence the prosecutors is disingenuous: a move so portentous for Russia's economy could be sanctioned only at the top."

Analysts have said the attack on Yukos was orchestrated by the Kremlin to punish Mr Khodorkovsky for meddling in politics. He was supporting Mr Putin's liberal opponents ahead of parliamentary and presidential elections.

The Financial Times said the shares' seizure was out of all proportion to the charges of fraud and tax evasion laid against Mr Khodorkovsky, who was arrested at gunpoint last Saturday.

"The president who might have gone down in history as a tough, but necessary, antidote to the chaotic rule of his predecessor Boris Yeltsin, is now plunging down the dangerous path to authoritarian rule. He must stop before it is too late."

"Mr Putin has served the West well in the war against terrorism. But this cooperation must not blind the US and the EU to the threat that he now poses to his country," it said.

Another Russian business daily, Kommersant, noted that the combined Russian market capitalisation has decreased by $27 billion or more than 16 per cent in less than a week.

"Investors don't believe in the market anymore and analysts think that this is just the beginning of a long way down."

The daily Vremya Novostei said Russian Prime Minister Mikhail Kasyanov, also believed to be sympathetic to Mr Khodorkovsky, was trying hard to refrain from commenting, but may change his mind very soon, publicly criticise the attack against Yukos and resign.

Fact Box - Breakdown of ownership of Russian oil giant Yukos

Following is a breakdown of ownership of stakes in the Russian oil giant Yukos.

Russian prosecutors on Thursday impounded a 44 per cent share in Yukos, belonging to core shareholders led by the firm's chief executive Mikhail Khodorkovsky, who was arrested last weekend and charged with massive fraud and tax evasion.

All calculations are done by analysts from Russia's leading brokerage Aton on the basis of a recent 2.7 billion additional share issue by Yukos, designed to facilitate a merger with smaller rival Sibneft.

Owner stake in Yukos in per cent

Core Yukos shareholders* 44.10 including: Special Trust (Mikhail Khodorkovsky is the sole beneficiary) 22.05 Mikhail Khodorkovsky** 4.19 Platon Lebedev *** 3.09 Leonid Nevzlin **** 3.53 Vladimir Dubov **** 3.09 Mikhail Brudno ***** 3.09 Vasily Shakhnovsky ****** 3.09 Others 1.98

Shareholders outside Khodorkovsky team 55.90 including: Veterans' Fund (for former Yukos employees) 7.75 Other (including free float, shares collateral to UBS exchangeable bonds, and treasury shares) 22.14 Core Sibneft shareholders 26.01

Note - * Stake fully impounded by prosecutors, but retaining voting and dividend rights.
** Mr Khodorkovsky was arrested last Saturday on charges on massive fraude and tax evasion.
*** Mr Lebedev was arrested in July on charges of theft of state property.
**** Mr Nevzlin and Mr Dubov are believed to have fled Russia to Israel.
***** Mr Brudno remains the head of Yukos's refining and marketing department.
****** Mr Shakhnovsky was charged with tax evasion but released on bail. He was then elected to the upper house of parliament, giving him immunity. Prosecutors are investigating his election.