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Sat 23 Jan 2010 01:06 PM

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Zain Saudi leads Saudi's index lower

UPDATE 1: All-share TASI index drags down 1.4 percent down to 6,296 points.

Shares in Zain Saudi Arabia closed at their lowest level since listing after it announced that it was in talks with mainly Saudi banks on missed commitments linked to a $2.5bn Murabaha loan.

Shares in Kuwait's Zain affiliate ended 0.98 percent down at 10.1 riyals - their lowest since a 6.3 billion riyals IPO in 2008 - after publishing on Saturday the bad news on an addendum to an encouraging set of earnings issued on Tuesday.

The all-share TASI index trimmed early trading losses and closed 1.4 percent down at 6,296 points, led down mainly by the banking and telecoms indices.

Of the 134 traded firms, 107 ended lower.

Investors were not pleased about the way the bourse watchdog Capital Market Authority's (CMA) has handled the communication on Zain Saudi Arabia's debt problems, said analysts who ask not to be named.

"Investors reacted in such a broad fashion to Zain Saudi Arabia's statement because they feel the market is taken for a ride not just by Zain but also by the stock market regulator. It is not the first time that something like this happens," one analyst says.

Many banks involved in Zain Saudi Arabia's Muarabaha deal lost some feathers after the announcement: Banque Saudi Fransi ended 3.7 percent down, Arab National Bank fell 3.3 percent and SABB bank shed 2.5 percent. (Reuters)

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