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Mon 3 Aug 2009 10:23 AM

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Emaar helps Dubai index to six-week high

UPDATE 8: Property giant surges as it mulls Indian unit IPO, SABIC shares boost Saudi index.

Emaar helps Dubai index to six-week high
STOCKS REPORT: Dubai Financial Market. (Getty Images)

Emaar Properties surged after the company said it was considering an initial public offering for its Indian unit.

Emaar jumped 8.5 percent to 2.94 dirhams, its biggest gain for a week, with the stock highly volatile since it announced plans in June to merge with three units of Dubai Holding.

"When Emaar broke 2.82 dirhams it gave investors the green signal to buy and it should now move towards 3.10 dirhams," said Ahmed Hamouri, Prime Emirates relationship manager.

"Overall, sentiment is positive with global markets and oil prices looking good."

Dubai's index hit a six-week closing high, rising 3.6 percent to 1,885 points.

"Most of the quarterly results have come out and these should give people confidence that we're starting to see a recovery," said Chamel Sahmy, Beltone Financial regional senior sales trader.

Resurgent oil prices lifted Saudi Basic Industries Corp (SABIC) to a seven-week closing high, boosting Saudi Arabia's index.

SABIC climbed 2.9 percent, bolstered by crude's advance. Oil is up 2 percent at $70.86 at 4.11pm UAE time, taking its gains to 11.9 percent since Wednesday's close as positive Chinese economic data and firmer equities bolstered hopes for an economic recovery and increasing energy demand.

The index rose 0.9 percent to 5,818 points, although analysts say continued low volumes mean current gains may be misleading.

Monday's trading saw 119.5 million shares change hands on the benchmark, which is less than half the three-month moving average of 241.2 million shares.

Property, bank and energy stocks pushed Abu Dhabi's index to a fresh seven-week high.

Abu Dhabi National Energy Co (Taqa) surged 7.5 percent, extending gains after saying it would buy a Dutch firm, while Aabar Investments added 6.6 percent.

Aldar Properties and Sorouh Real Estate rose 2.8 and 4.2 percent respectively and Abu Dhabi Commercial Bank climbed 4.7 percent.

Abu Dhabi's index rose 0.7 percent to 2,839 points, its highest finish since June 17. Industries Qatar helped lift Doha's index to another seven-week closing high, with investors buying petrochemical stocks as oil held above $70 a barrel.

Industries Qatar and top trader Gulf Holding Co each added 1.2 percent. The index climbed 0.4 percent to 6,787 points.

A late rally helped Kuwait's benchmark advance for a third session, inching up 0.1 percent to 7,691 points.

Zain slid 3.1 percent, with investors selling up as they grow impatient for further news about the possible sale of a stake in its African operations.

National Bank of Kuwait and Gulf Bank climbed 1.6 and 4.9 percent respectively.

"Oil prices are rising, which is good the Kuwait government budget," said Naser al-Nafisi, general manager for Al Joman Center for Economic consultancy in Kuwait.

Bahrain's measure slipped 0.4 percent to a fresh two-year low of 1,482 points.

Oman's index climbed to a fresh 2009 closing high as rising oil prices and bullish global equities boosted local sentiment.

The benchmark rose 1.7 percent to 6,061 points, its highest finish since December 18 last year.

Oman Telecommunications Co (Omantel) climbed 2.4 percent and Raysut Cement surged 5.6 percent.

Bank rose to lift the Dubai and Abu Dhabi benchmarks as investors bought financial stocks after quarterly results were broadly in line with expectations.

"UAE bank results have been positive, with lenders' capital adequacy ratios increasing, which shows stability is improving," says Wadah al-Taha, a Dubai-based financial analyst.

"But the main issue going forward will be whether their bad debts will increase and force banks to take more provisions. Loan to deposit ratios have also increased as deposits fall."

Combined bank deposits declined 1.1 percent in June from the month before, according to data from the UAE Central Bank, while the gap between loans and deposits increased by 51.6 percent over the same period.

"Profitability should not be the priority for banks -- it's more important to ensure they have enough liquidity, capital adequacy ratios are maintained and the loans to deposit gap does not get any wider," adds Taha.

Emirates NBD and Dubai Islamic Bank climbed 2.2 and 3.5 percent respectively. National Bank of Abu Dhabi rose 2.6 percent.

Abu Dhabi Commercial Bank surged 5.3 percent after unlisted Gulf Merchant Bank said it had completed a buy back of its shares held by ADCB.

These gains helped Abu Dhabi's index climb 0.6 percent to 2,835 points, while Dubai's benchmark rose 2 percent to 1,856 points.