Mideast Stocks: Most of Gulf rises as oil rallies but Saudi extends losses

Nine of 11 Saudi banks decline

A Saudi trader works at the Saudi Investment Bank in Riyadh. Image used for illustrative purpose.

A Saudi trader works at the Saudi Investment Bank in Riyadh. Image used for illustrative purpose.

REUTERS/Fahad Shadeed

Most major Gulf markets rallied for the third straight session on Thursday as oil prices rose, and rekindled U.S-China trade talks also cheered investors mood, while Saudi extended losses on worsening regional geopolitical tensions.

Oil prices rose by more than 3% to above $63 a barrel after Iran shot down a U.S. military drone, raising fears of a military confrontation between Tehran and Washington. 

Whereas China and the United States are rekindling trade talks ahead of a meeting next week between Presidents Donald Trump and Xi Jinping, cheering financial markets on hopes that an escalating trade war between the two countries would abate. 

Qatar's index gained 1.7%, to reach its highest since February, boosted by a 3.5% hike in Qatar National Bank and a 2.2% rise in Industries Qatar.

The former split its stocks last week, while Industries Qatar is due on June 25.

A 10-to-one stock split for companies on the exchange is being phased in from June 9, aiming to boost liquidity by encouraging smaller investors to buy shares.

The Abu Dhabi index closed 1.4% higher with Emirates Telecommunications adding 2.8% and First Abu Dhabi Bank (FAB) was up 1.2%.

On Wednesday, FAB said that it would close its sole branch in Qatar, citing Doha's regulatory actions against the bank. 

But the lender said Qatari actions have no impact on its business outside Qatar, and the Doha branch contributed less than 0.03% of its full-year 2018 net profit.

In Dubai, the index rose 0.7%, mainly lifted by Emaar Properties which closed 3.2% higher.

However, Saudi remained pressured from the latest escalation between Iran and U.S. in a spate of incidents in the region, while a missile launched on its utility station by Yemen's Houthis also weighed on the index.

Fears of a major military confrontation grew after the attack on the drone, which Iran's Revolutionary Guards said on Thursday was flying over southern Iran. 

Yemen's Iran-aligned Houthis launched a projectile into southern Saudi Arabia late on Wednesday which the Saudi-led coalition said landed near a desalination plant without causing damage or casualties. 

The Saudi index, which fell the day before, dropped another 0.7%, with most of its banking shares sliding. Saudi British Bank plunged 5.5% and Samba Financial Group shed 2.6%.

Egypt's blue-chip index lost 0.6% with Eastern Company slipping 2.2% and developer Medinet Nasr was down 3.9%.

The index fell consecutively for the third day after it closed higher on Monday; the day Egypt's first democratically elected president Mohamed Mursi died while on trial in a Cairo court.

Calls have been mounting for an inquiry into Mursi's death from many including Amnesty International and the U.N. Human Rights office. 

(Reporting by Ateeq Shariff in Bengaluru; Editing by Hugh Lawson) ((AteeqUr.Shariff@thomsonreuters.com; +918067497129;))

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