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Tue 31 May 2011 11:09 AM

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Saudi index edges up; petchems support

Dubai's benchmark climbs to an eight-day high and largest one-day gain since April 27

Saudi index edges up; petchems support
(Getty Images)

Petrochemicals and telecoms helped Saudi Arabia's bourse edge up towards Sunday's four-month high, while traders also focused on some small-cap stocks.

Dairy producer Almarai Co gained 0.3 percent and Savola Group climbed 0.4 percent, while Saudi Telecom Co added 3.3 percent, according to the bourse website.

The main benchmark TASI rose for a fifth session in six, ending 0.04 percent higher at 6,736 points to be up 0.4 percent in May.

Bellwether Saudi Basic Industries Corp climbed 0.2 percent, Saudi Kayan Petrochemicals added 0.6 percent and Methanol Chemicals Co - the most active stock - gained 2.1 percent.

Petrochemicals stocks often track oil price and US crude futures rose $2 to $102.59 a barrel on Tuesday as the dollar weakened against the euro.

Rising oil prices helped UAE stocks advance, with Dubai's index DFM making its largest gain in a month.

Bellwether Emaar Properties rose 2.6 percent, Dubai Islamic Bank climbed 1 percent and Emirates NBD added 0.3 percent.

Dubai's benchmark climbed 1.6 percent to end at 1,560 points, an eight-day high and largest one-day gain since April 27.

US crude futures rose $2 to $102.59 a barrel on Tuesday as the dollar weakened against the euro after expectations built that a second aid package would be agreed for Greece.

"I think regional markets, specifically Dubai and Abu Dhabi, are experiencing a reflex move on the back of a rise in oil prices over the past couple days," said Sleiman Aboulhosn, assistant fund manager at Al Masah Capital.

Abu Dhabi's index ADI gained 0.7 percent to 2,639 points.

Aldar Properties rose 0.7 percent and Dana Gas climbs 1.6 percent. These two stocks accounted for more than a third of total index volumes.

Elsewhere, Kuwait's index KWSE ended 0.06 percent higher at 6,378 points, rising for a second-day since Sunday's six-week low.

Banks supported, with National Bank of Kuwait up 1.7 percent and Gulf Bank up 3.7 percent.

Kuwait's central bank has told investment firms they will need separate licenses to operate their lending and investment businesses. The move is part of the Gulf Arab state's efforts to better regulate its financial markets and boost transparency and governance among investment firms.

Short-term pressure on investment stocks is expected on the back on increased costs for these firms.

KIPCO Asset management fell 3.8 percent.

"The formation of the CMA [capital market authority] is a positive development and will certainly contribute to improving the regulatory environment, which will ultimately benefit existing investors and draw in more investors from the regional and international community," said Aboulhosn.

Qatar's index QSI recovered early-session losses to end 0.3 percent higher at 8,375 points, only its second gain in seven sessions.

Qatar's foreign ownership limits will remain unchanged for the coming year, a bourse official said on Monday.

Oman's index MSI rose for a second day since Sunday's 22-month low as valuations draw in institutional buyers.

The benchmark ended 0.8 percent higher at 6,008 points, while volumes hit a six-week high.

"The market has over-reacted to the negativism, so a bounce-back is on cards, mainly driven by the bluechip counters," said Kanaga Sundar, Gulf Baader Capital Markets head of research. "Fundamentals remain intact and prices look attractive for those investing on a medium-term horizon. Institutionals [will] remain as net buyers on Oman's bourse," Sundar added.

Bluechips Renaissance Services and Bank Muscat rose 2.7 and 2.4 percent respectively.

Bank of America Merrill Lynch has upgraded Bank Muscat to "buy" from "neutral", citing excessive discounting for political risk and the negative impact from associate Bank Muscat International.

"Valuation is compelling," the US bank added.

"Recent government initiatives should offer comfort on political risk and support credit growth. We expect declining provisioning from 2H, driving up Bank Muscat's ROE return on equity."

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