Most stock markets in the Gulf settled higher on Wednesday ahead of a widely expected pause in interest rate hike by the U.S. Federal Reserve, while volatile energy prices and weak Chinese data limited gains. Most Gulf currencies are pegged to the dollar and any monetary policy change in the United States is usually mimicked by Saudi Arabia, the United Arab Emirates and Qatar.

Saudi Arabia's benchmark index rose 0.5%, gaining for a fourth straight session, with the country's biggest lender Saudi National Bank climbing 2.3%. However, oil behemoth Saudi Aramco lost 0.5%. The kingdom's pledge to deepen output cuts is unlikely to underpin a sustainable price increase into the high $80s to low $90s, Citi said in a note on Tuesday, even as other brokerages signalled a bigger deficit in the second half of the year.

Dubai's main share index added 0.3%, supported by a 1.7% rise in blue-chip developer Emaar Properties. In Abu Dhabi, the index inched 0.2% higher.

The Abu Dhabi bourse was volatile, echoing the price movements in oil markets. In this regard, the uncertainty in energy markets could weigh on expectations while the main index continues to trade below this year's low, said Daniel Takieddine, CEO MENA at BDSwiss. "The market could recover if oil prices rebound significantly."

Prices of oil, which fuels the Gulf's economy, edged higher as Saudi Arabia's surprise weekend pledge to deepen output cuts outweighed weak Chinese export data and rising U.S. fuel stocks.

The Qatari benchmark finished 0.4% higher, with Commercial Bank advancing 1.5%. Outside the Gulf, Egypt's blue-chip index retreated 0.8%.

The Egyptian stock market was weighed by changing global sentiment today but remained on an uptrend over a longer time frame, said Takieddine. "

However, the market continued to see support from local investors that dominated trading volumes."

  • SAUDI ARABIA rose 0.5% to 11,373
  • ABU DHABI up 0.2% to 9,377
  • DUBAI added 0.3% to 3,688
  • QATAR gained 0.4% to 10,296
  • EGYPT lost 0.8% to 17,346
  • BAHRAIN was flat at 1,952
  • OMAN eased 0.1% to 4,651
  • KUWAIT dropped 0.8% to 7,591

(Reporting by Ateeq Shariff in Bengaluru; Editing by Shilpi Majumdar)