Saudi Arabian shares close slightly higher

Saudi stocks closed slightly higher on Saturday after the government announced a 2013 state budget which analysts said was likely to support continued strong economic growth next year.

The market declined early on in response to a drop in global oil prices on Friday, but rebounded after the budget details were released. The government plans to spend SR820bn ($219bn) in 2013, 19 percent higher than the SR690bn earmarked for 2012.

The all-share index gained 0.2 percent to 6,877 points, even though petrochemicals fell slightly in response to the global picture, with Saudi Basic Industries Corp (SABIC) down 0.3 percent.

Oil prices settled lower on Friday after US data showed a sharp rise in gasoline inventories and as investors worried that US budget negotiators may not reach a deal in time to avert a fiscal crisis that could erode oil demand.

Immediate, minor resistance for the index lies around 6,900 points, where it peaked last week, with stronger resistance at the early November peak of 6,961 points.

The budget announcement was not a surprise, but it was seen as mildly positive for domestic demand-related stocks. Budget spending will focus on education, health and transport and communications.