Russia was facing one of the biggest tests of its market economy yesterday after it was forced to close its two main stock exchanges to halt a rout that has led to the steepest declines since the August 1998 crisis.

The two key bourses, Micex and RTS, said they were suspending trading until further notice from the state's main financial regulator after shares began to tumble again as investors faced a new wave of forced equity sales on margin calls and a dearth of cash. They had not reopened by close of business yesterday.

The collapse, which has wiped more than $700bn off the country's stock exchanges in a matter of months and sent stocks spinning down to levels last seen in 2005, was threatening to spread into the real economy amid talk of more than one bank failure.