Russia's government said yesterday it might give Yukos more time to pay off a huge bill for back taxes, a sign the Kremlin may be prepared to show mercy in its brutal fight with the oil giant.
The possible reprieve follows growing fears a bill for $3.4 billion in tax arrears, which must be paid by tonight, could push Yukos into bankruptcy and turn investors away from Russia just when it needs them to help boost its economy.
The government of Germany, one of Russia's most important economic partners, said Chancellor Gerhard Schroeder would not raise the matter in Moscow talks this week with Kremlin leader Vladimir Putin. The chanellor's spokesman had earlier said Berlin would "carefully monitor" developments.
The affair is widely seen as being orchestrated by the Kremlin to snuff out the political ambitions of the major Yukos shareholder, billionaire Mikhail Khodorkovsky.
Mr Khodorkovsky is in jail while he stands trial on charges of tax evasion and fraud.
Russia's Deputy Finance Ministry Sergei Shatalov told reporters that Yukos could get more time to pay.
"To do this we need a request from Yukos," he said "So far we haven't had one... I cannot rule out that a decision on restructuring could be taken, because this is no ordinary case."
His comments sent Yukos shares, which have been tumbling for months, up by as much as 23 per cent. By 1205 GMT they were quoted up five per cent at 196 roubles on the MICEX exchange.
"The market had feared that something irredeemable would happen on Thursday. The (Shatalov) comment means that Yukos would probably not be required to pay all at once. Talks are possible," Konstantin Shapsharov, trader from Alfa Bank, said.
President Putin has pledged not to destroy Yukos, which accounts for nearly a fifth of Russia's oil output but its future looked bleak as courts have frozen the company's assets, leaving it without the funds to honour the back-tax demands.
Analysts warn that the feud is raising investors' doubts about the political risks of putting money into Russia despite opportunities in a country awash with natural resources.
That in turn could slow Mr Putin's stated goal of doubling the size of the economy in a decade.
Ratings agency Standard & Poor's said the Yukos affair was one of several issues creating a volatile situation in Russia.
That will inevitably cast doubt over when the agency will finally assign an investment grade rating to Russia's debt, and so put it within reach of a huge new group of wealthy investors around the world.
Germany said the debt issue was not on the agenda for talks between Mr Schroeder and the German-speaking Putin. The two men are close and meet frequently.
Mr Schroeder's spokesman earlier denied a newspaper report that the chancellor had been asked by two German banks to lobby on their behalf and ensure Yukos is able to repay loans from them. He said Germany would "carefully monitor" developments at Yukos.