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Wed 10 Feb 2010 08:15 PM

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Global outlook lifts most Middle East markets

Kuwait claims 13 month high as investors cashed in gains, despite bluechips failing.

Global outlook lifts most Middle East markets
MARKET MILESTONE: Although Dubais market fell on Wednesday, other Middle East markets rose, with Kuwait hitting a 13 week high. (Getty Images)

Dubai's market fell on Wednesday following a newspaper report saying indebted conglomerate Dubai World was seeking an extended standstill, but other Middle East markets rose, with Kuwait hitting a 13 week high.Kuwait claimed this milestone despite most bluechips falling as investors cashed in gains. Banks led both Qatar and Oman higher and Saudi Arabia eased away from Tuesday's five week low as a rebound on US markets overnight bolstered regional sentiment. Dubai and Egypt were the exceptions.

Ali Khan, managing director and head of brokerage at Arqaam Capital, said: "There's an overhang from Dubai World's restructuring that will put a lid on UAE markets."

Dubai World intends to ask creditors for a six month standstill on $22 billion in debt this month, a local newspaper reported on Wednesday, weighing on shares, although traders said it was a contributory, rather than decisive factor in the market's fall.

Mohammed Yasin, Shuaa Securities chief executive, said: "We really have no liquidity in our markets because of the uncertainty of the debt negotiations and its effects on banking sector."

He added: "Therefore, small time day traders are trying to make some money on intraday trading on margin. They need to close their positions in a few days if not a few hours. Regardless of what the fundamentals are, they want to trade."

DP World, majority owned by Dubai World, fell 1.2 percent. It was down as much as 4.6 percent intraday.

Dubai's index opened brightly, but then fell to end 1.2 percent lower as heavyweight Emaar Properties dropped 4.3 percent in its biggest decline for two weeks, a day before the developer is expected to release its results.

Kuwait's index rose for a seventh straight session to its highest finish since Nov. 10, heightening expectations for a sustained uptrend.

Ammar Hajeyah, assistant vice president at Global Investment House, said: "Liquidity has started to strengthen."

He added: "Institutions and fund managers have started to deploy cash based on Kuwait's macro picture after the government announced its spending plans."

Earlier this month, Kuwait said its next budget would increase by about a third as part of a development plan to reduce dependence on oil.

Hajeyah added: "Some regional funds that were underweight on Kuwait are upgrading Kuwait to neutral."

He said: "There has been a move this month away from the speculative, small caps and into the heavyweight names - investors are waiting for results to come out and they want to qualify for dividends."

Asian stocks rose on Wednesday on signs the European Union may rescue debt strapped Greece, coaxing nervous investors back to riskier assets. Crude was up 0.5 percent at $74.10 a barrel at 1239 GMT on similar sentiment.

Arqaam's Khan said: "We need international markets to settle down and start to demonstrate more positive momentum."

He added: "That improved sentiment should spill over here, while uncertainty on international markets has limited the potential for foreign investors to increase their presence in our region."

Saudi Arabia's index rose 0.4 percent as Saudi Basic Industries Corp (SABIC) tracked gains in oil.

Orascom Construction Industries (OCI), lost 2.8 percent, weighing on Egypt's index, which fell for a second day. (Reuters)

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