Banks lift Qatar; Dubai slumps to new 7-year low

Telecom operator Zain Saudi closed at a two-month high after a stock upgrade while the kingdom's index slipped from Saturday's five-month higher as investors booked profit on petrochemical and banking stocks.

Shares in Zain jump 5.5 percent to SR5.75, their highest close since Oct. 29.

Riyad Capital upgraded the stock to 'buy' with a price target of SR6.40.

"One of the things holding back sales performance is the overhang from the debt restructuring," said Asim Bukhtiar, head of research at Riyad Capital. "We think a restructuring is imminent. The shares are deeply undervalued and do not reflect the on-going growth cycle."

Shareholder Zain Kuwait was trying to sell its 25 percent stake in its Saudi unit but talks were finally taken off the table in September when Kingdom Holding and Bahrain Batelco's $950m offer for a 25 percent stake in Zain Saudi failed.

"Now the management [of Zain Saudi] are in a position to focus on growing their business and earnings and reducing their losses," Bukhtiar adds.

Arabian Pipes surged 6.1 percent to a five-month high after proposing a bonus share issue.

Its board proposed increasing the company's capital by 27 percent to SR400m ($106.66m) by awarding bonus shares.

The Riyadh-based company plans to offer 1.079 shares for every four shares held, it said in a bourse statement.

Petrochemical stocks dragged down the index, with Saudi Arabian Fertilizers down 1 percent, National Industrialization slipping 0.5 percent and Yanbu National Petrochemical falling 0.9 percent.

Banks also weighed with Samba Financial Group shedding 0.9 percent.

The main index eased 0.03 percent to 6,382 points, halting seven days of gains.

Qatari shares ended higher as investors picked up stocks on expectations of strong dividend yield, while Dubai's bourse slipped to a fresh seven-year low.

Qatar National Bank gained 1.2 percent, Qatar Islamic Bank rose 1.1 percent and Masraf Al Rayan climbed 0.7 percent.

"The banking sector is still very high-yield dividend compared to the rest of the region, which keeps the interest of institutional and regional players," said Marwan Shurrab, vice-president and chief trader at Gulfmena Investments.

Industries Qatar rose 0.5 percent after its wholly owned subsidiary Qatar Steel said it has secured a $250m subordinated loan facility from two banks to finance expansion.

The index ended 0.4 percent higher at 8,816 points, held down by a strong resistance level of 8,819 points.

Its year-to-date gains rose to 1.5 percent.

In the UAE, the two main markets ended lower in muted trade with volumes in Dubai slumping to a two-week low.

Dubai's index slipped 0.8 percent to 1,328 points, its lowest close since 2004. Abu Dhabi ended near-flat.

"Most fund managers in the region started their vacations so there's not much activity in the UAE. Also there are no catalysts in the near-term," Shurrab added.

Abu Dhabi's Aldar Properties rose 2.4 percent, up for a second session from last week's record low, when traders dumped the stock on talk that the company would delist its shares. The company's deputy CEO dismissed the speculation as rumours last week.

Oman's shares extend gained with banks supporting, as investors positioned themselves for a new-year rally.

The index ended 0.2 percent higher at 5,649 points, trimming 2011 losses to 16.4 percent.

Heavyweight Bank Muscat rises 1.9 percent and Bank Sohar climbed 0.7 percent.

"Locally we may see a relief rally for the week led by new fund allocations and dividend play looking at the new year," said Kanaga Sundar, Gulf Baader Capital Markets head of research.

"We expect the local institutional buying interest picking up in index heavyweights and high-dividend-yield stories."

Telecoms operator Nawras climbed 0.5 percent.