Russia's 1st gold exchange-traded fund lists on Moscow bourse

* Shares trade in dollars, roubles; also on Irish bourse

* Launch comes amid heavy selling of gold ETFs

* Spot gold on track for its first annual drop since 2001

By Polina Devitt

MOSCOW, Oct (KOSDAQ: 039200.KQ - news) 17 (Reuters) - Investment management firm FinEx Group and the Moscow Exchange said they had launched Russia's first gold-backed exchange-traded fund as part of a bid to turn Moscow into an international financial centre.

The FinEx Physically Held Gold ETF fund, which has been listed on the Irish Stock Exchange and cross-listed on the Moscow Exchange, tracks the gold price as calculated using the London Gold Fixing Price, FinEx said.

Shares will be available in U.S. dollars and roubles, it added.

"Our research shows there is substantial appetite among investors for gold now and going forwards. We anticipate significant demand for this product, especially in Russia," Simon Luhr, chief executive of London-based FinEx Capital Management, said in a statement on Thursday.

ETFs, which issue securities backed by physical gold, give investors exposure to the underlying asset price without having to take delivery of physical metal and have proved a popular way to invest in gold since they were launched a decade ago.

This year, however, as gold prices have dropped nearly 25 percent in their first down year in more than a decade, investors have been selling holdings in gold ETFs.

Holdings of the largest, New York-listed SPDR Gold Trust , fell 3.6 tonnes to 885.53 tonnes on Wednesday, a 4-1/2 year low and some 35 percent below their December 2012 peak. The fund's outflows have amounted to over 400 tonnes this year.

The latest report by metals consultancy Thomson Reuters GFMS suggests that bullion prices are likely to decline further in 2014. The latest Reuters poll also suggests gold prices will drop in 2014.

The Moscow Exchange's chief executive, Alexander Afanasiev, said he sees the development of precious metals trading as a promising new direction for its business. The bourse also plans to launch spot trading in gold and silver this month.

Russia's over-the-counter market in gold is currently dominated by large banks such as Sberbank (Other OTC: SBRCY - news) and VTB . The Moscow Exchange expects banks and brokers to participate initially in spot trading in gold and silver.