The holding group Interros, which controls the Russian metals giant Norilsk Nickel, has denied that its president, Vladimir Potanin, has been arrested.

A spokeswoman described the market rumour as "absolutely untrue" explaining that Mr Potanin was away on a scheduled business trip, Reuters reports.

The Russian media had asserted that Mr Potanin, who heads the country's palladium and nickel industries, had been arrested and was now in custody in Israel.

Norilsk, the world's largest nickel and palladium producer which also produces significant amounts of platinum, copper and gold, saw its shares fall by 10 per cent at one stage today on the back of the alleged arrest.

Russia's business elite has been nervous since the arrest last October of Mikhail Khodorkovsky, who was head of the oil giant YUKOS, in a move that many observers regard as punishment for his evident political ambitions.

One banking source told Reuters: "People are just very, very nervous, especially after what happened to Khodorkovsky. And if they now get Potanin, it would be just too much for us."