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Tue 23 Aug 2011 10:44 AM

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Saudi index ends near-flat ahead of 10-day break

Muted trading activity suggests investors are preparing for Eid holiday, which kicks off next week

Saudi index ends near-flat ahead of 10-day break
Asian shares rose on Tuesday after modest gains on Wall Street and upbeat economic data from China (Getty Images)

Saudi Arabia's bourse closed near-flat ahead of a long holiday as investors take risk off the table amid an uncertain global environment.

Petrochemical stocks slipped with bellwether Saudi Basic Industries Corp (SABIC) down 1.4 percent. Saudi Kayan Petrochemicals was the second most actively traded stock on the index, and fell 0.3 percent.

Investors are watching developments in oil exporter Libya, where forces still loyal to Libyan leader Muammar Gaddafi fight rebels. Brent crude was up 31 cents to $108.66 a barrel at 1206 GMT, boosted by better-than-expected manufacturing data in Germany and China.

The benchmark edged 0.07 percent higher to 5,920 points, trimming its 2011 losses to 10.6 percent. Bank stocks support with the sector's index rising 0.1 percent. Al Rajih Bank climbed 0.7 percent.

Saudi Arabia's market will be closed for a 10-day holiday starting August 24 for Eid Al Fitr, the festival marking the end of the Muslim month of fasting.

Emaar Properties dragged down Dubai's index , while bluechips helped lift Abu Dhabi to a higher close.

Emaar fell 0.7 percent and lender Emirates NBD slipped 2.4 percent. Dubai Financial Market limited losses, gaining 0.9 percent.

Muted trading activity suggested investors are preparing for the Eid holiday, which kicks off next week.

"To have a sentiment in the market, you need to have people," said Sebastien Henin, portfolio manager at The National Investor. "There is no sentiment due to a lack of investors. But at the same time, the situation is not as bad as it could be."

World stocks have been tumbling since the beginning of August - and perceived safe havens such as gold and US Treasuries have rallied - on fears of a slide back into recession for the US and growing concerns that Europe's politicians are failing to contain its sovereign debt crisis.

"What we have seen in Europe, shouldn't affect our markets so much. Since the beginning of August, we've lost only a quarter or third of what the developed markets lost. It's a good indication- their main concerns are not related to our region. "

The benchmark declined 0.4 percent to 1,459 points, extending the month's drop to 3.9 percent.

Meanwhile, Abu Dhabi's benchmark extended gains for a second day, rising 0.3 percent to 2,578 points.

Energy firm Dana Gas rose 1.9 percent, Aldar Properties gains 0.9 percent and Sorouh Real Estate climbed 0.9 percent. Heavyweight First Gulf Bank advanced 3.3 percent.

Elsewhere, Qatar's index ended 0.4 percent higher at 8,124 points, trimming its year-to-date losses to 6.8 percent.

"We can look at it [Qatar] as a more resilient market as there is interest at these levels," says a Doha-based trader who asked not to be identified due to company policies.

"Or we can look at it like a mild correction is overdue and will do so soon. I'm going to bet on the earlier notion. It has solid support at these levels."

Banks led gains with Doha Bank gains 1.2 percent and Commercial Bank of Qatar rose 1.9 percent.

Local pension funds helped stem a two-day decline on Oman's market as bluechips presented buying opportunities and a weak upside correlation to global markets supported.

Bank Muscat rose 0.6 percent, Oman Telecommunications Co gained 0.9 percent as did Renaissance Services .

"There is strong buying from local pension funds on Bank Muscat, Omantel and Renaissance and also some from foreigners, which is a good indicator," said Adel Nasr, United Securities brokerage manager, adding downward pressure on Oman will be strong if world stocks dip, while an upward correlation is weak.

"It's not a time to speculate, we're telling people to buy on fundamentals and high dividends

The benchmark climbed 0.1 percent to close at 5,490 points, but it is down 5.5 percent so far in August.

Volumes were high in small-cap Al Jazeira Services , which jumped 4.6 percent, indicating high retail investor interest.



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