MOSCOW - RUSSIA will use money from an oil fund to buy shares in Russian companies hit by the financial crisis, Finance Minister Alexei Kudrin said on Friday, warning stock prices would continue to fall.

'Next week we will start investing 175 billion rubles (S$9.79 billion dollars) from the National Wealth Fund,' Mr Kudrin told lawmakers who were due to approve a financial rescue plan, Russian news agencies reported.

'We will use some of it to buy shares in good Russian companies that are undervalued,' Mr Kudrin was quoted as saying.

Officials had been holding off on tapping the reserves of the National Wealth Fund, which was created this year using windfall oil revenues to make investments abroad and support the budget in case of a fall in oil prices.

The fund had US$48.68 billion (S$72.18 billion) on Oct 1, the finance ministry said.

In an address to a session of parliament due to approve parts of the government's rescue plan, Mr Kudrin said investors had pulled US$33 billion dollars out of Russia in Aug and Sept.

He also predicted even more losses on Russia's stock markets, which have shed around two-thirds of their value since record highs posted in May this year.

'Risks on the world market so far are increasing, so our indices are going to fall. The volatility of the indices is a feature of our weak financial system,' Mr Kudrin said.

The ruble-denominated MICEX stock exchange was down 6.01 per cent at 589.16 points in the middle of Friday's trading session, while the dollar-denominated RTS had fallen 5.08 per cent to 677.62 points. -- AFP