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Thu 16 Jul 2009 10:52 AM

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Bond sale talk lifts Dubai index

UPDATE 2: DFM jumps 6.1%, Emaar Properties adds 2.8% and Shuaa Capital climbs 7% on UAE bourse.

Bond sale talk lifts Dubai index
STOCK WATCH: Dubais index DFM climbed 2.5 percent to 1,754 points. (Getty Images)

Dubai Financial Market (DFM) was the lead gainer on Dubai's index DFM, which rose on expectations of the sale of a second government bond and a rally in global equities.DFM jumped 6.1 percent, Emaar Properties added 2.8 percent and Shuaa Capital climbed 7 percent.

The UAE central bank may buy into the second tranche of Dubai's $20bn bond programme after buying the first part earlier this year, its governor was quoted as saying on Wednesday.

"There's good sentiment in Dubai after the bank governor's remarks about the second tranche of bonds," said Nadim Jalad, a trader at Naeem Shares and Bonds in Dubai.

"This will enable Dubai government companies to meet their obligations and pump liquidity into the market."

The index climbed 1.5 percent to 1,737 points, its third successive advance. Volumes hit a seven-session high.

Abu Dhabi's benchmark ADI rose 1.5 percent to 2,677 points, its highest finish for more than three weeks.

Aldar Properties climbed 6.3 percent and Sorouh Real Estate added 3.7 percent. Aabar Investments rose 4.4 percent.

US stock markets rallied overnight and Asian equities started Thursday trading strongly, before giving away much of these gains.

Kuwait's index KWSE ended higher for a third session, despite four of its five largest stocks declining, as Gulf markets rally on rising global sentiment.

The benchmark climbed 0.5 percent to 7,580 points. Zain and National Bank of Kuwait each fell 1.6 percent and Agility dropped 3.7 percent.

"I think investors are wary of believing in the next rally and so the market will consolidate around current levels," says Jassem Al Zeraei, head of institutional sales at National Bank of Kuwait Capital.

"We can't yet say whether this is a slowdown in the downtrend with more downside next week or whether a rally might continue."

National Mobile Telecommunications climbed 2.4 percent.

Qatar Islamic Bank lifted Doha's index QSI to a higher close after the lender's quarterly earnings beat forecasts.

Qatar Islamic climbed 3.3 percent, but Commercial Bank of Qatar fell 2.8 percent after posting a 45 percent decline in second-quarter profit, according to Reuters calculations.

The index climbed 1.9 percent to 6,385 points, its third straight gain. The benchmark retreats from an intraday high of 5,560 points as some investors cash in gains ahead of further second-quarter earnings announcements. Volumes hit a five-week high.

Bahrain's measure BAX closed lower for the fifth session in six, falling 0.7 percent to 1,497 points.

Bank Muscat surged after announcing its second-quarter profit as financial stocks rally worldwide, lifting Oman's index to a higher close.

The lender ended 8.1 percent higher, its largest one-day gain since June 3.

Bank Muscat's second-quarter profit fell 62 percent to $31.17 million, according to Reuters calculations, after it took $104.4 million in provisions against potential losses at Saudi conglomerates Saad Group and Ahmad Hamad Algosaibi & Bros.

"People are speculating on whether the bank will end up taking out the full provisions," says Hassan Tawfiq, a senior broker at United Securities in Muscat.

"They're expecting full-year profit to be around 100 million Oman rials ($259.7 million), which would give a PE (price to earnings) ratio of about eight, which is not too high. The quarterly profit was not as bad as people had thought it would be."

Muscat's index climbed 2 percent to 5,537 points, its biggest one-day rise since June 3.

"Gulf markets are tracking gains in global stocks and oil prices and if these fall again, our markets will follow," says Tawfiq.

"Oman investors are trading on day-to-day basis and will wait for more second-quarter figures to come out before deciding their strategy." (Reuters)