The Russian stock market, already unsettled by the arrest of Russia’s richest tycoon and the resignation of the Kremlin chief of staff, dived sharply today for the second time this week after prosecutors froze a large chunk of shares in oil giant Yukos.

The jailing of Russia’s richest man in what is widely seen as a politically-driven attack on his oil empire could herald a return to Soviet-style repression that is bound to trigger capital flight, media and politicians warned today.

Russia is unlikely to veto a second UN Security Council resolution that could lead to war with Iraq, a senior US official said today.