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Tue 3 May 2011 12:58 PM

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Petchems weigh on Saudi, but outlook upbeat

UAE markets end mixed with bluechips lifting Dubai's DFM from Monday's 18-day low

Petchems weigh on Saudi, but outlook upbeat
REGIONAL BOURSE UAE markets extended declines as investors awaited local catalysts to spur renewed buying (Getty Images)

Petrochemical stocks headed losses on Saudi Arabia's index TASI as investors
booked profits from Monday's gains.

Saudi Basic Industries Corp (SABIC) and Saudi Arabian Fertilisers Co (Safco)
fell 0.9 and 0.6 percent respectively. The petrochemicals index was down 0.7
percent, but is seen making further gains on the back of strong first-quarter
earnings and high oil prices.

"All signs are positive except the decline in oil prices," said Hesham
Tuffaha, Bakheet Investment Group head of asset management.

A further drop in oil prices could spur profit-taking, he said.

"But I expect oil to keep above $100 a barrel following a weak dollar,
so most likely the market will increase gains but that will be in coming
weeks," added Tuffaha.

Oil dipped below $113 a barrel on Tuesday as the dollar rose from a
three-year low and traders weighed the impact on the market of al Qaeda leader
Osama bin Laden's death. Crude hit a 31-month peak on Friday.

Saudi Arabia's main benchmark ended 0.4 percent lower at 6,694 points,
falling for three of the past five sessions. It is up 1.1 percent in 2011.

Kuwait's index KWSE fell and volumes remained low amid local political uncertainty following the resignation of the country's cabinet in April.

The benchmark closed 0.2 percent lower at 6,502 points, taking its 2011 losses to 6.5 percent. It hit a 10-week intraday high on Monday.

"The level 6,500 is a very critical level for the market," said a Kuwait-based trader who asked not to be identified.

"Market will be sustainable around this level for a while until the government is formed."

Kuwait's cabinet resigned in April over the questioning of three ministers and a new cabinet has yet to be announced.

Five of top 10 largest stocks end flat and three decline.

National Mobile Telecommunications Co (Wataniya) dropped 1 percent, but rival Zain added 1.7 percent.

Elsewhere, UAE markets ended mixed with bluechips lifting Dubai's index DFM from Monday's 18-day low. It ended 0.1 percent higher at 1,630 points, but volumes slumped to an eight-week low.

Emaar Properties and Emirates NBD rose 0.6 and 0.2 percent respectively, while logistics firm Aramex added 1.1 percent.

Abu Dhabi's index ADI slipped 0.1 percent to 2,689 points, a three-week low.

National Bank of Abu Dhabi and Abu Dhabi Commercial Bank fell 0.4 and 1.1 percent respectively. Abu Dhabi Islamic Bank dropped 0.6 percent.

Analysts said the market lacked local catalysts and is due for consolidation.

Bluechips weighed on Muscat's index MSI and Ominvest gave back gains as investor interest wanes.

"Markets seem to be dull in the absence of results from major companies within the services sector," says Osama Ibrahim Al Qinna, head of brokerage at Oman Arab Bank.

"Low bank deposit interest rates are encouraging the investors to invest more in bonds."

Ominvest slipped 1 percent. It surged on Monday after a local newspaper said discussions to float a bank unit were at an advanced stage.

The benchmark ended 0.3 percent lower to 6,353 points, easing from Monday's two-week high as volumes drop by more than a third from a day earlier.

Oman Telecommunications Co (Omantel) and rival operator Nawras each fell 0.7 percent. National Bank of Oman dropped 1 percent.

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