Saudi index leads Gulf decline; euro crisis, oil weigh

Saudi Arabia's index slumped to a three-week low, halting a three-session rally, with jittery investors booking profits as fears of a debt default by Greece and tumbling European equities weighed on local sentiment.

World shares fell 2 percent on Monday, with European stocks down 3 percent for a more than 20 percent loss this year.

In Saudi Arabia, banking and petrochemicals - the two heavyweight sectors - slid.

Newly-listed Integrated Telecom Company slumped 7.4 percent and is the most traded stock. Alimna Bank dropped 1.1 percent and bellwether Saudi Basic Industries Corp (SABIC) fell 2.9 percent.

"If the market moves along fundamentals, we should see positive movement in the index going forward but a lot of this depends on the international markets," said Asim Bukhtiar, head of research at Riyadh Capital. "If there are further shocks [internationally], it could affect Saudi Arabia."

Some analysts expected a better second-half in terms of corporate earnings, despite the gloomy picture.

"Banks and telecoms look attractive at the moment. Both have been oversold and offer attractive entry points," Bukhtiar added.

The benchmark declined 1.7 percent to 6,037 points, its lowest close since August 24 and extending its 2011 losses to 8.8 percent.

Oman's Renaissance Services fell after warning it will be tough to recover the $2.9m lost in fraud at its marine unit Topaz and most Muscat shares ended lower, with regional markets weak amid growing concerns about Europe's debt crisis.

The oil services firm, the third-most active stock on Oman's index , closed 0.6 percent lower and was down 38.1 so far in 2011. It has completed an investigation in to the misappropriation of $2.9 m and isolated fraud to one foreign unit, it said on Monday.

"This may be taken as a constructive step towards developing the trustworthiness of the company over a medium to longer term," said Kanaga Sundar, Gulf Baader Capital Markets head of research in a note. "The stock is still trading at a lower valuation for the next fiscal year as compared to the global offshore support vessel players."

Heavyweight Bank Muscat declined 0.2 percent and Bank Sohar slipped 0.7 percent.

The benchmark ended 0.6 percent lower at 5,676 points, extending its 2011 losses to 16 percent.

Elsewhere, Kuwait's index slipped 0.05 percent to 5,977 points, ending a 10-day rally. Large-caps were down, but logistics operator Agility bucked the trend and surged 8.5 percent to its highest close since July 14.

Agility extends gained for a second day since a media report in Kuwaiti daily Al Qabas said the company had formed an alliance to buy into the privatisation of state-owned Kuwait Airways.

Dubai's shares slumped to a three-week low and neighbouring markets also slid as investors eyed losses in world shares amid fears Greece may default and signs of rifts among euro zone policymakers. .

World shares tumbled nearly 2 percent on Monday with European equities at 26-month lows.

Dubai's top traded stocks, the main targets for retail investors who try to profit in short-term trading, head losers. Emaar Properties and builder Arabtec fell 1.4 and 2.2 percent respectively, while contractor Drake & Scull dropped 2.1 percent. The trio accounted for nearly half the total shares changing hands on the index.

"Fears over a US double-dip recession and debt problems spreading from Greece to other European countries is increasing risk in international markets," said Marwan Shurrab, vice-president and chief trader at Gulfmena Investments. "That's why we're seeing a sell-off across the board which is pressuring our markets. There's a lack of interest for taking risk. I would not expect foreigners to head to our markets."

Dubai's benchmark dropped 0.9 percent to 1,460 points, its lowest close since August 24.

Abu Dhabi's index shed 0.4 percent to 2,584 points, its fourth-straight decline to take its 2011 loss to 5 percent. Property stocks slid, with Aldar Properties down 1.6 percent and Sorouh Real Estate dropping 1.7 percent.

Elsewhere, Doha's bourse slipped 1 percent to close at 8,295 points, taking its year-to-date losses to 3.6 percent, the top performing Gulf Arab benchmark. Qatar's stocks have proved more resilient because of the country's robust economy, which is forecast to grow 16.7 percent in 2011.

Doha losers outnumbered gainers 16 to three. Heavyweight Industries Qatar (IQ) slipped 1.7 percent and Qatar National Bank fell 0.6 percent.

"The banking sector is the most eyed in Qatar, as well as petrochems like IQ. Qatar's petrochems are the most attractive in the region at current prices," Shurrab said.