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Mon 22 Jun 2009 10:16 AM

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Saudi index closes at seven-week low

UPDATE 5: Dubai's index ends higher for first session in six, Abu Dhabi down for third session.

Saudi Arabia's index slumped to its lowest close for seven weeks lower as declining oil prices and worries over banks' potential exposure to two troubled family conglomerates firms weighed on sentiment.

The benchmark fell 0.6 percent to 5,709 points, its lowest close since May 3 and fourth straight decline.

Al-Rajhi Bank dropped 1.2 percent and Samba Financial Group lost 1.1 percent.

Saudi family firms Ahmad Hamad Algosaibi & Brothers and Saad Group are trying to restructure $10 billion in debts, according to a newspaper report and investors are worried about the extent of banks' exposure to the two groups, analysts say.

Oil's slumped to below $69 a barrel hit petrochemical stocks. Saudi Basic Industries Corp (SABIC) lost 0.7 percent and Rabigh Refining and Petrochemical Co slid 1.9 percent.

"Oil's move lower is a spanner in the works for a fresh move higher," said Matthew Wakeman, EFG-Hermes managing director for cash and equity-linked trading.

Dubai's index ended higher for the first session in six as most stocks rebounded, but Abu Dhabi's benchmark retreated for the third successive trading day.

Activity was concentrated on stocks trading below their par value, with Deyaar and Drake & Scull accounting for a third of index volumes. The pair rose 3.7 and 1.1 percent respectively.

The bluechips also prospered, with Emaar Properties climbing 2 percent and Dubai Financial Market rising 2.9 percent.

Dubai's measure climbed 0.5 percent to 1,953 points. It had fallen 11.6 percent in the previous five sessions as investors booked profits from a recent rally.

"The trend over the next couple of months will continue to be downwards, but there will be the odd up day," says Sanyalaksna Manibhandu, Emaar Saudi Financial Services head of research.

Abu Dhabi's index fell 0.2 percent to 2,745 points, taking its losses to 7.4 percent since hitting a six-month closing high on June 14.

Emirates Telecommunications Corp (Etisalat) fell 1 percent and Arkan Building Materials lost 2.9 percent.

Qatar's index ended higher for the first session in six following significant gains in two banks, but Kuwait suffered its biggest decline for more than four months.

Qatar National Bank climbed 3.8 percent and Doha Bank rose 3.9 percent.

These gains helped Qatar's index climb 1.3 percent to 6,557 points.

Kuwait's benchmark suffered its largest one-day loss since early February, falling 2.1 percent to 8,055 points.

National Bank of Kuwait dropped 3.1 percent, Kuwait Finance House dropped 4.8 percent and Agility plunged 5.3 percent.

Bahrain's index ended lower for the second session in three, slipping 0.3 percent to 1,624 points.

Oman International Bank jumped 7.6 percent as investors rearrange their portfolios ahead of changes to the index weightings, helping Muscat's benchmark reach a six-month closing high.

Oman's index will introduce new weightings from July 1, increasing the prominence of smaller-cap stocks and reducing the influence of the bluechips.

"There was big buying by asset managers, with the main gainers those stocks that will see the biggest increases in their index weightings," says Adel Nasr, United Securities brokerage manager.

"OIB's weighting will increase from 6 to 9.5 percent for example, while Bank Sohar and Ahli Bank will also gain and so investment companies are rebalancing their portfolios."

Bank Sohar rose 5.2 percent and Ahli Bank surged 6.1 percent.

Monday's rise is Oman's fifth gain in six sessions, bucking the regional downward trend. The index climbed 1.6 percent to 5,815 points, its highest finish since December 21 last year.

Index volumes hit a 13-session high, excluding last Wednesday when a transfer of shares between two directors of Bank Sohar warped trading figures.

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