UPDATE: Russian Antitrust Body Opens Investigation Of Rusal

Russia's antitrust body stepped up efforts to curb price fixing Wednesday by opening an investigation into the world's biggest aluminum producer by output, United Co. Rusal PLC (0486.HK).

The Federal Antimonopoly Service, or FAS, said it has begun investigating five units of Hong Kong-listed Rusal for allegedly manipulating the wholesale power market.

The watchdog said five power plants owned by Rusal are accused of seeking to push down power prices by not filing bids on local markets.

Rusal said the claims were groundless and that it's "acting in accordance with the law." The company's stock closed 2.7% lower at HK$6.81 each in Hong Kong.

Rising energy and metals prices have become a major issue in Russia in recent weeks, after the antitrust service launched investigations into some of the country's biggest companies for abusing their dominant market position to manipulate prices.

The FAS won a landmark court victory in late May, when Russia's High Arbitration Court upheld claims by the service against TNK-BP Ltd., the country's third largest oil company, which is half-owned by U.K. oil major BP PLC (BP), to pay a $35 million fine for fixing wholesale prices of some oil products.

The agency also recently launched a probe into steel producer Evraz Group SA (EVR.LN)--partly owned by billionaire Roman Abramovich--causing a slide in the company's share price. The FAS was responding to complaints by railroad-car and automobile producers as well as oil and gas companies, which are worried about rising costs of steel used in pipelines.

That investigation will likely be broadened to include other Russian metallurgical companies such as Magnitogorsk Iron & Steel Works (MAGN.RS), OAO Severstal (CHMF.RS) and Novolipetsk Steel OJSC (NLMK.RS), analysts said.

The agency has generally been seen as a weak government body, but Putin has said repeatedly that it should more actively use its authority.

In July 2008, Putin criticized OAO Mechel (MTL) billionaire shareholder Igor Zyuzin for the pricing of raw materials in Russia, driving the company's shares down 38%.

-By Jacob Gronholt-Pedersen, Dow Jones Newswires; +7 495 232 9197; jacob.pedersen@dowjones.com

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