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Thu 9 Aug 2012 10:18 AM

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Earnings in focus; Asian gains may support

UAE markets, reaping the benefits of recovery in the real estate sector, could see a further lift

Earnings in focus; Asian gains may support
Gulf investors will react to mixed earnings while global markets extending gains on Thursday may support sentiment.

Gulf investors will react to mixed earnings while global markets extending gains on Thursday may support sentiment but trading will be muted with the region's largest bourse, Saudi Arabia, closed for the weekend.

UAE markets, reaping the benefits of recovery in the real estate sector, could see a further lift after struggling Abu Dhabi property developer Aldar Properties reported a forecast-beating second-quarter profit.

The firm said its net profit increased three-fold, buoyed by delivery of 1,058 high-end residential beach units.

"Q2 is the first quarter you see improvement in the economy being reflected in earnings," says Amer Khan, fund manager at Shuaa Asset Management. "These are fundamentals that haven't been priced in. For a long while, we've been blindly following global markets."

Dubai's National Central Cooling Co (Tabreed) named former vice-president of Mubadala Industry, Jasim Thabet, as its new CEO.

Sentiment is likely to suffer in Kuwait however, as another lender posts weak earnings.

Commercial Bank of Kuwait (CBK), the country's seventh biggest bank by market value, posted a 5.4-percent drop in quarterly profits on Wednesday as heavy provisioning once again wiped out earnings growth.

The lender had net profit of KWD122,000 (US$433,000) in the three months to June 30. An EFG Hermes analyst polled by Reuters had forecast net profit of KWD4.4m.

Investor confidence is shaky in Kuwait, as banks, who represent about 60 percent of the market's revenues, have so far posted disappointing second-quarter results, with high provisions and warnings the economic situation in the country is being hurt by political stagnation.

Members of parliament again boycotted a session of the country's assembly on Tuesday, foiling an attempt to swear in a new cabinet and further highlighting the political travails hampering the state.

Kuwait's index is hovering near a seven-month low, with year-to-date losses at 1.8 percent.

Elsewhere, Asian shares rose to a three-month high on Thursday after a drop in Chinese consumer inflation left room for more policy easing to support growth.

Brent crude stayed above US$112 a barrel on Thursday on hopes of more stimulus from China.

Global shares lost steam on Wednesday and traded little changed, while the euro fell as a lack of details prompted investors to tone down optimism for early central bank action to tackle the euro zone debt crisis.