Ukraine's stock market is Europe's best performer this year, buoyed by exports to neighboring Russia and the European Union

Ukraine's stock market is Europe's best performer this year, buoyed by exports to neighboring Russia and the European Union. The country's benchmark PFTS Index, with 10 stocks, has surged 57 percent. The next best European performer, Romania's BET10 Index, is up 45 percent. The Dow Jones Stoxx 50 Index, a regional benchmark for Western Europe, has added less than 0.1 percent in the period. Ukrainian shares climbed as the economy accelerated at a record pace. Rising demand for fuels, steel and services has bolstered prospects for companies such as VAT Ukrnafta, the country's largest oil company, and VAT UkrTelecom, its former phone monopoly. "It's a neglected market that has strong growth and cheap valuations," said Aivaras Abromavicius, who manages $600 million in Eastern European equities at East Capital Asset Management in Stockholm, which owns shares of Ukrnafta. "The investment case is there." The country's $50 billion economy will expand 9.5 percent this year, up from 9.4 percent in 2003, according to government estimates. That compares with a 6.6 percent growth forecast for Russia by the Economic Development and Trade Ministry, and is more than five times the 1.7 percent rate predicted by Brussels. Exports jumped 40 percent in the first quarter, according to the State Statistics Committee. Russia, Ukraine's largest trading partner, accounts for about a quarter of the total. The European Union ranks second and China third, government statistics show.