MOSCOW – Russia's five-day war with Georgia and oil's recent slide have shaken investor confidence, sent the country's stock market to a 2-year low and forced the government to prop up the battered ruble.

Analysts say there may be more pain to come as the global economy stumbles.

On Friday, Russia's U.S. dollar-denominated RTS benchmark index dropped almost 4 percent to a low last seen in June 2006, fueled by fears Russia faces isolation following its intervention in Georgia and tumbling commodity prices.

The index closed down 3.76 percent, to 1,469.15 points, after diving below 1,600 points on Wednesday. The ruble-denominated MICEX index fell 3.68 percent, led by Norilsk Nickel which shed 8.78 percent and VTB bank – down 7.19 percent.

While stock markets are posting losses globally, Russian stocks have been particularly volatile. They have been battered in recent months by a power struggle over Anglo-Russian oil joint venture TNK-BP and Prime Minister Vladimir Putin's public assault on mining company Mechel, which has lost half its market value.

“The downward movement is likely to persist at least until the presidential election in the United States in November,” said Maxim Osadchiy, chief analyst at investment bank Antanta Pioglobal. He said the RTS index could soon drop to 1,300 points, another “psychologically important level.”

The battle between BP PLC and its Russian partners over TNK-BP ended Thursday when the two sides agreed that TNK-BP CEO Robert Dudley, a U.S. citizen, would step down by the end of the year. The British oil company will be allowed to keep its 50 percent stake and will nominate a new, independent CEO to replace Dudley, which must be approved by TNK-BP's board.

OAO Lukoil deputy vice president Andrei Gaidamaka told The Associated Press during an interview in New York that the agreement was a “positive sign” that should help Russia's standing with investors.

Analysts say foreign investors have pulled out between $7 billion and $10 billion from Russia since Aug. 7, when Georgia launched an assault on separatist-held South Ossetia. Russian armor and air power quickly rolled the Georgians back, and laid waste to the country's military infrastructure.

Russian central bank Deputy Chairman Alexei Ulyukayev on Friday estimated that $4.6 billion in foreign capital fled the country during August, however. He said that still leaves a net total foreign capital inflow to Russia of $25.4 billion over the past eight months.

Arthur Hovsepian, emerging markets strategist at Payden & Rygel Investment Management in Los Angeles, said the Russian market's troubles were being exacerbated by a global aversion to risk in the current economic climate.

“The Russia-specific story was partly from the Georgia conflict but also from the way the central bank has been managing its currency,” he said.

Timur Nasardinov, chief trader at the Moscow-based investment bank Troika Dialog, said he doesn't expect further big selloffs now that the war with Georgia is over.

“Politics is over now,” he said, adding that Russian stocks' fall will now match that of their global peers.

Sergei Karykhalin, chief analyst from the investment bank Kapital, agreed, saying that “declining global markets and slower economic growth in Europe are more important for the Russian market now.”

Nasardinov said the market could get a lift from the Russian Energy Ministry's statement on Friday that it will push to significantly reduce the tax burden on oil companies.

Ulyukayev also confirmed market rumors, saying Russia sold a “significant” amount of foreign currency Thursday to prop up the Russian ruble, which has taken a battering as oil prices and Russian stocks slide.

He declined to give the exact amount, but market watchers say the government may have sold between $5 billion and $10 billion.

The central bank official denied that the government may take further measures to bolster the ruble.

Karykhalin, of Kapital investment bank, described the move as positive. “It has reassured foreign investors who hold some of their assets in rubles,” he said.

The official Russian ruble-U.S. dollar rate currently stands at 25.4 rubles per dollar – close to a one-year low. While the ruble was strong earlier this year, economists complained that it was damaging the economy, making Russian exports less competitive.