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Thu 9 Jul 2009 10:28 AM

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Emirates NBD drags Dubai index to 7-week low

UPDATE 4: Emirates NBD falls 2.1 percent, taking its losses to six percent.

Emirates NBD drags Dubai index to 7-week low
STOCK WATCH: Kuwaits index KWSE fell 0.5 percent to 7,575 points.(Getty Images)

Emirates NBD reversed early gains to tumble for a second day since a ratings cut, dragging Dubai's index DFM to a new seven-week closing low.

Emirates NBD fell 2.1 percent, taking its losses to six percent since Standard & Poors cut its ratings for two of the bank's units.

Dubai's index fell one percent to 1,682 points. Dubai Financial Market DFM dropped 5.3 percent. The company derived most of its revenues from share trading commissions and so the index's 23.4 percent fall since June 14 will impact profit.

"The markets probably run ahead of themselves, given that the rally was based on volumes rather than earnings," said Matthew Wakeman, EFG-Hermes managing director for cash and equity-linked trading.

"This can't be sustainable unless we get some solid earnings to justify the move higher."

Abu Dhabi's benchmark ADI advanced for the first time this week, boosted by gains in National Bank of Abu Dhabi and First Gulf Bank, which rise 1.2 and 2.2 percent respectively.

The index ended 0.3 percent higher at 2,589 points.

Oman's index slid to a seven-week closing low as oil's recent decline and jittery global markets sapped sentiment.

The benchmark fell 1.2 percent to 5,420 points, its fifth straight decline and lowest finish since May 18.

Bank Muscat fell three percent, while Jazeera Steel dropped 3.3 percent following broad declines in commodity prices over the past week.

"There's been a negative news flow from global markets," said Shailendra Singh, investment manager at Al Shurooq Securities.

"It is crucial that oil holds above $60 to meet government budgets, while a price of more than $70 will give leverage to increase state spending on infrastructure projects, which would be positive for the private sector."

Oil was up 2.1 percent at $61.67 after slipping to an seven-week closing low on Wednesday.

Emirates NBD rebound to lift Dubai's index DFM and stocks are mixed on slight volumes.

The lender climbed 3.6 percent, with 1,900 shares changing hands. The rise followed a four percent decline the previous day after Standard & Poors cut its ratings for two of the bank's units.

S&P also reduced its rating for Dubai Islamic Bank, which dropped 0.9 percent.

Aldar Properties and Sorouh Real Estate climbed 2.3 and 1.6 percent respectively.

With Gulf markets broadly moving together, positive earnings from Qatar National Bank is helping to calm investors after sharp declines this week, analysts said.

"The markets probably ran ahead of themselves, given that the rally was based on volumes rather than earnings," Matthew Wakeman, EFG-Hermes managing director for cash and equity-linked trading.

"This can't be sustainable unless we get some solid earnings to justify the move higher."

The index climbed 0.3 percent to 2,587 points.

Oil prices were up 1.1 percent at $60.80 a barrel on Wednesday after slumping to seven-week closing low the day before. Oil has fallen 17 percent since last week's eight-month high.

Qatar National Bank advanced after announcing a 12 percent rise in second-quarter profit, beating forecasts.

Qatar National rose 1.8 percent on slight volumes. Qatar's index QSI climbed 0.8 percent to 5,942 points as stocks rebound from Wednesday's nine-week closing low.

"QNB accounts for about 40 percent of the banking sector and it's all about sentiment, so if investors feel comfortable with QNB's results it will boost bank stocks," said Osama Rayyan, chief dealer at Dlala Brokerage & Investment Holding.

Qatar Islamic Bank climbed 3.7 percent, Commercial Bank of Qatar rose 3.8 percent and Al Khaliji Bank added two percent.

Mobile operator Zain declined after its chief executive denies the company has reached a deal to sell its Africa operations to Vivendi.

But Saad Al Barrak acknowleged the firm is in early talks over sale of a stake in its African operations.

Zain fell 3.6 percent, taking its losses to 12.9 percent this week.

Kuwait's index KWSE fell 0.5 percent to 7,575 points. (Reuters)