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Mon 9 Jan 2012 10:30 AM

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UAE markets weak as investors remain aloof

Kuwait's benchmark is down 3 percent since Kuwait's emir dissolved parliament on Dec 6

UAE markets weak as investors remain aloof
Qatar, Saudi Arabia and Oman are forecast to have the highest economic growth rates in the Gulf in 2012

Saudi Arabia's index ended lower for a first session in three on minor bluechip declines.

Saudi Basic Industries Corp (SABIC) fell 1.3 percent, Al Rajhi Bank slipped 0.3 percent and Saudi Electricity dropped 0.4 percent.

The index fell 0.4 percent to 6,442 points.

Many investors are waiting on companies to announce full-year results, but other factors are also at play, said Hesham Tuffaha, Bakheet Investment Group's head of asset management.

"If oil holds above $100, I think the market will see a gradual increase, but if we have more tensions with Iran, it will have a major effect on the Gulf as a whole," he added.

Iran's Supreme Leader Ayatollah Ali Khamenei said on Monday the country would not yield to the pressure of sanctions imposed by the West to get the Islamic Republic to change its nuclear course.

Brent crude futures slipped on Monday, reversing earlier gains to trade below $113 a barrel, as worries about the economic health of the euro zone offset a premium related to Iran's threat to shut a key oil-shipping route.

National Bank of Abu Dhabi (NBAD) and telecoms operator Etisalat were the main drags as Abu Dhabi's index made its largest decline in two weeks to near December's 33-month low, while Dubai was near-flat.

NBAD tumbled 3.7 percent and Etisalat dropped 1.1 percent, while former market favourite Aldar Properties dived 4.4 percent to be down 94 percent from a 2008 peak.

The index slid 1.1 percent, its largest decline since Dec 21.

"We just don't see any appetite from investors - they have liquidity and are looking for investments, but not in equities," said a Dubai-based trader who spoke on condition of anonymity.

"UAE stocks are in a tough spot - spending is coming back from the government and consumers, but that is not being reflected in the markets."

Dubai's benchmark reversed early-session losses to end 0.03 percent higher at 1,335 points. Losers outnumbered gainers 13 to six, with Arabtec the main support, climbing 3.1 percent.

Kuwait's benchmark slumped to a seven-year low as bank stocks slumped, with traders pessimistic on the local economy amid continued political turmoil in the world's sixth-largest oil exporter.

National Bank of Kuwait dropped 1.8 percent, Kuwait Finance House slid 1.1 percent and Ahli United Bank dipped 1.2 percent.

The index fell 0.5 percent to 5,694 points, its lowest finish since August 2004 as volumes hit a month-high.

The benchmark is down 3 percent since Kuwait's emir dissolved parliament on Dec 6, which followed sustained protests against the prime minister. The ruler subsequently called an early parliamentary election for Feb 2.

"It looks like all investors were selling today - there are still political issues in Kuwait and the government doesn't seem to be doing anything about helping the economy, so investors are cautious," said a Kuwait trader who asked not to be identified.

He forecast the index will extend declines, with its next support at 5,380 points.

"I am not optimistic about the market - there are no stocks good enough to buy, because even if you think their fair value is higher than today's price, you know they still have further to fall," the trader added.

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