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Sat 6 Nov 2010 06:08 PM

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Saudi shares gain most in two months on Fed stimulus plan, oil

SABIC rose to highest level since May after oil rose by $5.42 a barrel in the past week

Saudi shares gain most in two months on Fed stimulus plan, oil
SHARES GAIN: SABIC soared 6.1 percent to $27.8, the largest gain in 5 months. (Getty Images)

Saudi Arabian shares rose the most in 2 months after US and European markets advanced and oil prices rallied as the Federal Reserve announced another round of bond purchases to boost the world’s biggest economy.

Saudi Basic Industries Corp, the world’s largest petrochemicals maker, known as SABIC, advanced to the highest level since May 5 after oil rose by $5.42 a barrel in the past week. National Industrialization Co surged 3.1 percent.

The Tadawul All Share Index gained 1.9 percent to 6,461.74 at the 3:30 pm close in Riyadh, the biggest rise since September 4. The measure has rallied 12 percent since its low this year in May.

Stocks advanced around the world this week after the Fed announced plans to buy an additional $600 billion of treasuries in a second round of quantitative easing. The central bank also kept its pledge to hold interest rates low for an “extended period” after Chairman Ben S Bernanke said the program could be modified in some way.

Asim Bukhtiar, equity analyst at Riyad Capital in Riyadh said: “The market is taking its cue from the highly anticipated events of last week in the US. The QE2 announcement is expected to lift asset prices and risk tolerance.”

The Standard & Poor’s 500 Index ended the week with a gain of 3.6 percent, its fifth straight weekly advance and the longest rally since April.

The Stoxx Europe 600 Index rose 2.3 percent this week, the biggest gain in two months. The 21 country benchmark MSCI Emerging Markets Index surged 4.5 percent this week.

Amro Halwani, a trader at Shuaa Capital PSC in Saudi Arabia said: “Oil has also made a large up move over the weekend, this is helping investors place larger bets on petrochemicals.”

SABIC soared 6.1 percent to $27.8, the largest gain in 5 months. National Industrialization, the petrochemical maker known as Tasnee, rose 3.1 percent to $8.7, the highest price since October 10.

Yanbu National Petrochemicals surged 4.2 percent to a six month high of $11.9. Saudi Industrial Investment Group soared 4.3 percent to $5.22.

Crude oil climbed to a two year high after US payrolls rose more than forecast in October, bolstering confidence in the economy, while the dollar headed for a weekly decline against most major currencies.

Crude rallied 6.7 percent this week to $86.85 a barrel on the New York Mercantile Exchange, the highest settlement price since October 8, 2008. Saudi Arabia holds one-fifth of the world’s proven oil reserves.

Al Rajhi Bank, the kingdom’s largest publicly traded lender, rose 1.6 percent to $21, the biggest gain in almost three months.

Saudi Arabia’s index is the only Gulf Arab benchmark tracked by Bloomberg that trades on a Saturday.


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