Most Gulf stock markets moved little early on Monday and Saudi Arabian banking shares were largely stable after some dropped on the previous day in response to news of a deal with tax authorities. Two blue chips dragged Dubai's market down sharply.
The Saudi index was up 0.1 percent after 80 minutes with Al Rajhi Bank flat and Samba Financial Group adding 0.5 percent. Five bank stocks were higher, two lower and the rest flat.
Saudi banks agreed with Islamic tax authorities to resolve a dispute over increased liabilities that will result in one-off payments, although many banks had already made provisions for much of the liabilities.
Months of uncertainty over the settlement unsettled some investors, but analysts at Arqaam Capital said the 16.5 billion riyal ($4.4 billion) settlement was a "non-event" for banks fundamentally, with a cumulative impact of just 3 percent on shareholder’s equity and 60 basis points on capital adequacy ratios in coming years.
"We remain overweight on Saudi banks and view this settlement as a positive event ahead of even more pivotal catalysts" -- Saudi Arabia's inclusion in emerging market indexes next year, and expected rises in domestic interest rates, Arqaam said.
Qatar's index was flat although Qatar Commercial Bank fell 1.9 percent.
The Dubai index tumbled 1.6 percent to a five-year low as Emaar Properties lost 1.9 percent and Emirates, the top bank, fell 4.5 percent in very thin trade.
But Union Properties gained 2.1 percent after saying it would hold a board meeting on Thursday to consider buying back 10 percent of its shares, in order to resell them later.
(Reporting by Ateeq Shariff in Bengaluru; Editing by Andrew Torchia) ((firstname.lastname@example.org; within U.S.+1 646 223 8780; outside U.S. +91 80 6749 2733; Reuters Messaging: email@example.com))