President Vladimir Putin tightened his grip on the Kremlin on Thursday by relieving his chief of staff from duty, Russian news agencies reported, a move likely to deepen political and economic turmoil following the arrest of Russia's richest tycoon.

Putin named Dmitry Medvedev, the first deputy chief of staff and the chairman of the Russian natural gas giant Gazprom, to succeed Alexander Voloshin in the post. Medvedev is one of many figures in Putin's St. Petersburg circle who have been jockeying for influence with other groups in the Kremlin.

Rumors that Voloshin had resigned rattled Russian political and business circles for several days.

The announcement of Voloshin's departure came hours after prosecutors froze a huge chunk of Yukos shares, plunging the stock market into its second nosedive in a week. The benchmark RTS Russian stock index closed down 8 percent after the announcement of the share freeze and Yukos shares lost 14 percent.

Voloshin's departure would signal a strengthening of the security-service faction in the Kremlin connected with Putin from his days as a KGB agent which appears eager to stem the influence of magnates such as Khodorkovsky.

Medvedev, the man Putin named to replace Voloshin, has no security-service background, and his views on big business are not widely known.

But Medvedev's election in 2000 by shareholders as chairman of Gazprom was seen as heralding government attempts to bring more influence to bear on the company, which is Russia's largest. The government owns 38 percent of the shares in Gazprom, which controls more than 90 percent of the gas production in Russia and 25 percent of the world's gas reserves.

A subsidiary of Gazprom took control of independent NTV television in 2001 after the collapse of Vladimir Gusinsky's empire in the first of the Putin-era legal actions targeting the "oligarchs."

Infighting in the Kremlin has been a hallmark of Putin's presidency, and Voloshin's departure is likely to help Putin consolidate his own power and that of his allies. Medvedev worked in the early 1990s as an aide to the late St. Petersburg mayor Anatoly Sobchak, as did Putin after he left the KGB.

Voloshin was a key figure under Yeltsin in the years when former Soviet state industries were privatized at giveaway prices in dubious auctions. Voloshin and his allies believed that privatization would help prevent a Communist comeback following the 1991 Soviet collapse.

Voloshin, who was named Yeltsin's chief of staff in March 1999, was regarded as a central figure in the so-called "Family," the group of businessmen and politicians who wielded enormous power under Yeltsin. Former Russian chief prosecutor Yuri Skuratov alleged in 1999 that there was substantial evidence connecting Voloshin to graft in the corruption-tainted Yeltsin administration.

The stock market's sharp reaction Thursday to the announcement of the share freeze appeared to reflect investor fears that a probe of Yukos that began in July could foretell troubles for Russia's biggest companies.

Many worry that the Kremlin could launch a broad revision of the results of the privatization of the 1990s, in which tycoons like Khodorkovsky snapped up prized chunks of state assets. Some analysts believe that Khodorkovsky's arrest will serve as an example to other phenomenally wealthy Russians to refrain from challenging Putin.

The freeze was a new escalation in a 4-month-old probe of Yukos, which took a dramatic turn on Saturday when Khodorkovsky was arrested and jailed after being seized by special agents at a Siberian airport.

The arrest was widely seen as an action staged by some of Putin's top lieutenants to avenge the tycoon's political activities, which included funding of opposition parties.

Top Russian media reported that Voloshin submitted his resignation to Putin on Saturday after Khodorkovsky's arrest, but agreed to wait a few more days to avoid inflicting political damage to the president.

Interfax reported Thursday that Anatoly Chubais, the head of the Unified Energy Systems electricity monopoly, invited Voloshin, who serves as the company's board chairman, to become a full-time employee of the company. UES wouldn't comment on the report.

Putin, in a Kremlin meeting with top businessmen and investors on Thursday, made no reference to Yukos. He said that Russia has taken many steps to improve the business climate, such as judicial reforms and improving demands for corporate transparency.

But later one of the participants, Morgan Stanley International president Stephan Newhouse told Dow Jones Newswires that "he assured us that this (Yukos case) does not represent a campaign against business or any change in the government's commitment to the market economy."

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