Most stock markets eked out small gains on Sunday despite hopes for ​a diplomatic breakthrough ⁠in the U.S.-Israeli conflict with Iran fading, with stalled talks underscoring ‌the hardening positions of both Tehran and Washington.

Though a ceasefire has been in ​place since February 28, no deal has been reached to end a ​war that has ​killed thousands, driven up oil prices, fuelled inflation and dimmed global growth prospects.

The war has deepened instability in the Middle ⁠East, with Tehran striking its Gulf neighbours and fighting resuming between Israel and Hezbollah in Lebanon after Prime Minister Benjamin Netanyahu ordered a forceful assault on Hezbollah targets on Saturday, putting a U.S.-brokered ceasefire ​under further strain.

Saudi ‌Arabia's benchmark ⁠index edged 0.1% ⁠higher, helped by a 0.6% rise in Al Rajhi Bank and a ​1.4% increase in Saudi Arabian Mining Co. Shares in ‌Rabigh Refining and Petrochemical Co jumped 10% ⁠to 12.65 riyals ($3.37), the highest since October 2022, after the company swung to its first quarterly profit in nearly two years. Oil major Saudi Aramco eased 0.4%.

In Qatar, the index added 0.1%, supported by a 0.6% gain in petrochemical maker Industries Qatar. Outside the Gulf, Egypt's blue-chip index edged 0.1% higher.

Analysts in a Reuters poll have cut their forecasts for Egypt's economic growth this year and ‌next, citing higher energy prices and rising inflationary pressure ⁠from the Iran war. Last week the IMF ​reduced its projected growth to 4.2% in calendar 2026 from an earlier estimate of 4.7%.

Saudi Arabia rose 0.1% to 11,122 Qatar was up 0.1% to ​10,668 Egypt firmed 0.1% ‌to 52,421 Bahrain added 0.2% to 1,937 Oman fell 0.5% to ⁠8,120 Kuwait rose 0.3% to 9,469 ($1 = 3.7507 ​riyals)

(Reporting by Ateeq Shariff in Bengaluru;Editing by Elaine Hardcastle)