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Sun 26 Aug 2012 10:09 AM

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Gulf seen up on global gains; Zain in focus

A positive global backdrop and gains in Saudi Arabia's bourse on Saturday are likely to push Gulf stocks higher on Sunday

Gulf seen up on global gains; Zain in focus
Saudi Arabias bourse rose 1.4 percent on Saturday to 7,104 points.

A positive global backdrop and gains in Saudi Arabia's bourse on Saturday are likely to push Gulf stocks higher on Sunday, while volumes should recover gradually as investors return from Eid holidays.

US and European stocks rose and the euro bounced off lows against the dollar on Friday after sources said the European Central Bank was considering setting targets in the bond market in an effort to contain crippling borrowing costs in troubled euro zone economies.

Speculation has grown in recent weeks that the ECB will soon start buying Spanish and Italian bonds.

"The tone is positive for now - even though I'm bearish globally, our markets have room to move higher," says Rakan Himadeh, equity portfolio manager at Dubai-based Al Mal Capital.

Saudi Arabia's bourse rose 1.4 percent on Saturday to 7,104 points, closing safely above the psychological key level of 7,000, which should provide strong support.

"Investors will wait for Saudi Arabia for more direction, and it will rise about half a percent," Himadeh predicts, adding however that global markets are likely to decline in the short term until stimulus measures are actually taken.

Kuwait's telco Zain will be in focus after a source told Reuters that Vodafone was close to signing an agreement with Zain to gain access to its Middle East networks.

Oil prices fell on Friday after a report that the International Energy Agency was likely to tap strategic oil reserves as soon as September. Brent October crude fell US$1.42 to settle at US$113.95 a barrel.

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