UPDATE 4: Rising oil prices boost demand for petrochemical stocks in Saudi.
Saudi Arabia's index TASI hit a 19-week high as Saudi Basic Industries Corp (SABIC) extended gains and other bluechips advanced, with some analysts tipping the kingdom's bourse to be the top regional performer this year.SABIC climbed 1.4 percent, equalling Monday's 16-month intraday high, with rising oil prices boosting demand for petrochemical stocks. Rabigh Refining and Petrochemical Co added 1.2 percent. Oil was up 0.4 percent at $81.80 a barrel at 1236 GMT.
"We are very positive on Saudi Arabia and it seems the kingdom is fairly close to opening the market up to full foreign ownership, which will be a major boost," says Daniel Broby, chief investment officer at London-based Silk Invest.
"If this happens, then assets are likely to be reallocated to Saudi Arabia from other Gulf markets."
He predicts Saudi Arabia will be the best performing Gulf Arab market over the next 12 months.
Saudi Electricity Co climbed 1.2 percent.
"The rally began in February and seems to have further room to go," Shuaa Capital wrote in a research note.
"Traders should hold on to their positions, but they should also place tight protective stops in order to lock in their gains."
The index rose 0.6 percent to 6,566 points, its highest finish since Oct. 24.
Abu Dhabi's index ADI hits a 15-week closing high as banks surged, buoyed by dividend-based buying and a positive broker report. National Bank of Abu Dhabi climbed 2.6 percent after HSBC raised its price target for the stock to AED19.2 from AED18.1, giving it an overweight rating and saying it was the best way to play Abu Dhabi banks.
First Gulf Bank climbed 4.5 percent, taking its gains to 8.3 percent since it approved a 50 percent cash dividend.
The index rose 1.2 percent to 2,827 points, its highest close since Nov. 25 and its largest gain for five weeks.
Dubai's index DFM ended lower for the first session in five as some investors opted to book gains from the recent stock surge.
The index climbed 4.9 percent in three days amid rumours of an imminent announcement over Dubai World's debt restructuring.
"Market sentiment depends on what happens with Dubai World and there's still a lot of speculation in the market," says Samer al-Jaouni, General Manager of Middle East Financial Brokerage Co. "The market is not moving according to fundamentals or technicals, but rumours about Dubai World."
Emaar Properties slipped 0.9 percent to 3.37 dirhams. It was up 12.7 percent this week.
"It's good to see Dubai steady at current levels, especially Emaar after its sharp rally of the past few days - Emaar holding near 3.40 dirhams is a positive signal," said Jaouni.
National Central Cooling Co fell 5.8 percent, tumbling for a third day since saying it would receive a $354 million bailout from Abu Dhabi investment vehicle Mubadala.
Selling pressure on banks weighed on Qatar's index QSI, which ended lower for a first day in three, with no new catalysts to spur fresh buying.
Commercial Bank of Qatar dropped 0.2 percent. It jumped 6.5 percent in the previous two days. Qatar National Bank and Industries Qatar each fell 0.8 percent.
"CBQ saw a big rally for the previous few sessions, especially yesterday, so there's a technical correction today and banks in general are under pressure," says Samer Al Jaouni, General Manager of Middle East Financial Brokerage Co.
"We're not expecting any breaking news apart from Q1 results so usually would not see heavy trading and it is important for the market to hold above 6,800 points.
The index fell 0.5 percent to 6,818 points. It was down 2 percent since hitting a six-week high on Feb. 22.
Banks slid, weighing on Kuwait's index KWSE, which declined for a third in session in four.
A late rally enabled National Bank of Kuwait to end flat. On Thursday, HSBC downgraded the stock to underweight from neutral.
Commercial Bank of Kuwait fell 3.2 percent and Kuwait Finance House (KFH) lost 1.7 percent. On Monday, KFH forecast flat earnings for 2010.
"(Middle East) banks are likely to continue to face refinancing risk in the medium term," HSBC wrote in a research note.
The index slipped 0.1 percent to 7,437 points.
Banks helped Oman's index MSI end higher for the first session in three as volumes hit a two-week high, with investors buying back stocks at lower levels. "The market was down for a few days, so people saw value in some stocks," says Sayed Quadry, vice-president of business development at Amwal Investment in Muscat.
"The market is looking more positive and sentiment has improved, with people increasingly buying for the medium- to-long-term, but the large investors are still outside the market - trading is coming from small-medium investors."
These big traders will only return once first-quarter results come out, says Quadry, and providing no bad news hits international markets in the meantime.
National Bank of Oman climbed 1.6 percent and Bank Muscat added 0.5 percent.
The index rose 0.3 percent to 6,655 points. It was down 2.1 percent since hitting a 15-month high on Feb. 21.
Banks have been steady in terms of news flow this year, says Quadry, so investors are buying back at lower levels following the market's recent slide.
SABIC lifts Saudi index to 19-wk high. (Reuters)