Dubai rebounds, Gulf markets gain as traders up risk

Dubais index rose for a third session in four on Tuesday as upbeat global markets buoyed sentiment, but late selling wiped out much of its intraday gains, with short-term retail traders dominant and seeking a quick profit.

Most Middle East markets were also up as investors worldwide bought into riskier assets on hopes European leaders would agree on fresh action to tackle the regions debt crisis.

Dubais index climbed 0.6 percent, easing away from Wednesdays 15-week low to take its 2012 gains to 10.6 percent.

"What were seeing now is daily trading from small speculators - they are watching global and regional markets and trading based on that," said Samer al-Jaouni, general manager of Middle East Financial Brokerage Co. "People prefer to do daily trading. Institutions are cautious and prefer to watch."

Traders focused on mid-cap, liquid stocks that are easy to enter and exit.

National Central Cooling Company (Tabreed) fell 1.6 percent and Islamic mortgage lender Tamweel dropped 0.9 percent, while builder Arabtec rose 0.7 percent. This trio accounted for more than a third of all shares changing hands.

In neighbouring Abu Dhabi, Aldar Properties and Sorouh Real Estate climbed 3.7 and 3.9 percent respectively, extending gains after sources told Reuters the emirate had picked four banks to advise on a potential merger of the two state-backed developers.

The merger plan comes after property prices tumbled in the United Arab Emirates from 2008 peaks. Property firms have been forced to cancel projects and restructure their huge pile of debt, while Aldars shares are down 92 percent from a 2008 high.

In Saudi Arabia, petrochemical and bank stocks led gains as the kingdoms benchmark rose for a third day since Saturdays three-month low.

Bellwether Saudi Basic Industries Corp (SABIC) climbed 1.1 percent, Al-Rajhi Bank rose 2.4 percent and Yanbu petrochemical (Yansab) added 1.9 percent.

"Its mainly oil prices dictating Saudi market sentiment," said Hesham Tuffaha, Bakheet Investment Group head of asset management.

Saudi will not cut spending even if oil prices fall, Finance Minister Ibrahim Alassaf said on Tuesday.

Oil was steady at around $92.55 at 1152 GMT, having rebounded from Fridays seven-month low.

The scope for further gains will depend on crude prices - should oil break above $100 again, Saudis share index could head towards 8,000 points, but if prices drop below $90, it will be difficult for the benchmark to hold at current levels, Tuffaha said.

He forecast the Saudi market would rise 1-2 percent over the next week or so.

"Most likely, oil and global markets will continue rising and that will help the Saudi market," he added.

Omans index climbed 2.3 percent, its largest gain in 15 months as volumes hit a five-week peak.

Oman Telecommunications and rival operator Nawras added 1.1 percent and 3.9 percent respectively.

Trading had slumped following the launch of Bank Nizwas IPO last month as investors sold shares to subscribe to the offering.

"The IPO is closing today so whatever money people had left over, theyre putting this back into the market," said Joice Mathew, United Securities head of research in Muscat.

TUESDAYS HIGHLIGHTS

DUBAI

* The index climbed 0.6 percent to 1,497 points.

ABU DHABI

* The measure rose 0.1 percent to 2,471 points.

SAUDI ARABIA

* The index climbed 1.1 percent to 7,104 points.

QATAR

* The benchmark rose 0.9 percent to 8,499 points.

KUWAIT

* The measure fell 0.5 percent to 6,381 points.

OMAN

* The index rose 2.3 percent to 5,750 points.

EGYPT

* The measure slipped 0.3 percent to 4,864 points.

BAHRAIN

* The measure fell 0.7 percent to 1,138 points.