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Wed 23 Jan 2008 01:54 PM

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Arab markets rebound after 'Black Tuesday'

Dubai led pack, up 10.5%, followed by Abu Dhabi and Egypt as Gulf states cut interest rates.

Arab stock indexes recovered on Wednesday after some of their sharpest falls ever as the US interest rate cut made it cheaper for companies to borrow in several countries that peg their currencies to the dollar.

Dubai led the pack, up 10.5% at 0920 GMT, followed by Abu Dhabi and Egypt.

All Gulf states, bar Qatar and Oman, cut interest rates after the US Federal Reserve slashed its benchmark rate by 0.75 of a percentage point on Tuesday.

All but Kuwait peg their currencies to the dollar. Kuwait ties its dinar to a basket dominated by the dollar.

"These interest-rate cuts have helped the markets all into green territory," said Talal Al-Tawari, head of Gulf equities at Gulf Investment Corporation.

In Dubai, Emaar Properties and Dubai Islamic Bank were up 11.5% and 12% respectively. In Egypt, where the benchmark was up almost 5%, Orascom Construction and Orascom Telecom led.

Dubai's index fell 6.2% on Tuesday, its biggest one-day loss since March 2006. Oman's benchmark sank 8.3%, Qatar's 7.8% and Abu Dhabi's 6.8%, in each case a record fall.

The Gulf markets were already closed when the US Federal Reserve announced its interest rate cut, giving a shot in the arm to European bourses. (Reuters)

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