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Wed 13 Jan 2010 12:19 AM

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Bank stocks slide as regional sentiment sours

Qatar makes biggest one day loss in 5 weeks, while Oman and Bahrain stocks rise.

Middle East bank stocks slumped on Tuesday following further disappointing results from Saudi Arabia lenders, while other sectors also declined as sentiment soured regionally and globally.

Dubai fell 2.4 percent, Qatar made its biggest one day loss for five weeks, Saudi Arabia fell for a third day and Kuwait and Abu Dhabi also declined. Egypt, Oman and Bahrain all rose.

Saudi Arabia's Al Jazira Bank slipped to a nine month low its fourth quarter losses widened, while smaller rival Arab National Bank also ended lower after its net profit fell.

Saudi Hollandi Bank and Banque Saudi Fransi both declined for a second day since reporting below forecast earnings.

Across the Middle East, about five times as many bank stocks declined as advanced.

Ian Munro, MAC Capital head of research, said: "The lead from Saudi banks was negative, Asia was weaker and oil has slipped, so a flat to negative day (was) to be expected."

Saudi Arabia's market was steady, falling 0.4 percent, and Musa Haddad, head of MENA equity desk at National Bank of Abu Dhabi, said he was bullish on the bank sector's prospects.

Haddad said: "Saudi is holding pretty well and looks good, we're still positive on the market so long as it holds above 6,150 to 6,200 points."

He added: "It could be the banking sector that leads a rally in Saudi Arabia, despite the bad figures."

The Saudi banking index rose 15 percent last year, lagging the petrochemicals index, which surged 65 percent over the same period, so a catch up play is possible in the longer term, providing bank provisions fall, analysts say.

The immediate outlook for the Dubai bourse appeared bleaker, however, after late selling sent stocks tumbling.

Arabtec extended its slump, falling 5 percent to take its losses to 15 percent since saying it would sell a majority stake to Aabar Investments in a deal that will dilute existing holdings. Aabar fell 0.4 percent.

Marwan Shurrab, vice president at Gulfmena Alternative Investments, said: "Investors are bearish in the short-term for Arabtec because of the dilution effect, but there is value for medium to long term, so investors want to sell at current levels and then buy back once the dilution has taken place."

Emaar Properties fell 4.4 percent to a three-week closing low, taking its losses to 10 percent since hitting a six-week high on Jan 4.

"People don't want the stock," said NBAD's Haddad. "Even though Emaar went up, it was on small volumes and didn't break any new resistances and is trading below short, medium- and long-term moving averages, which signals people are exiting."

In Doha, investors dumped merger targets Barwa Real Estate and Qatar Real Estate (Alaqaria) . Barwa dropped 5.8 percent to a five-month low and Alaqaria fell 4.9 percent.

"Like all other markets we are waiting for a lead from financial results," said Mohamed Abu Ghoush, head of equities brokerage at Ah-Ahli Bank.

Oil fell below $82 a barrel, slipping from Monday's 15 month high. World stocks dropped and Wall Street looked set for a poor start as investors digested early results from the U.S. and European that came in below estimates. (Reuters)

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