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By Celine Aswad
DUBAI, April 26 (Reuters) - Two Saudi banks soared on Wednesday after saying they were in initial stages of a merger, helping lift the mood in other lenders while first quarter financial results buoyed the shares of two blue chips in other Gulf countries.
On Wednesday Saudi's Alawwal Bank
Shares in Alawwal soared by 8.6 percent in their heaviest daily traded volume since May 2012 while SABB jumped 6.8 percent in the largest single day volume since November last year.
"While the merger, if it goes through, is good news for both lenders, Alawwal will benefit more from the tie up from reduced operating cost," said Mohammad al Shammasi, chief executive of Riyadh based Derayah Financials.
Other analysts said that currently the price-to-book ratio of both lenders, a common measure used to determine the relative value of banks, is low and that a merger will help drive up the value of the combined entity.
The positive mood spilled into other baking shares, with mid-sized Saudi Investment Bank
Yanbu National Petrochemical
"We believe lower than expected operating rates and higher operating expenses were offset by gross margin expansion. Operating rates... lower than our estimate mainly due to preparation for shutdown in second quarter of 2017," said a note by Riyadh-based NCB Capital.
Improving petrochemical prices, strong balance sheet and an attractive dividend yield of around 5 percent are the key strengths of the stocks, NCB Capital added that rates the stock an "overweight" with a target price of 50.40 riayals.
Most other petrochemical producers have not yet reported earnings as authorities have granted companies an additional 15 days to report earnings since they are converting to IFRS accounting standards from the local standard.
The Saudi index
Elsewhere, shares of the largest listed company, telecommunications operator Etisalat
The Abu Dhabi index
Shares of energy company Abu Dhabi National Energy
S&P said the downgrade came as a result of "recent related-party transactions at TAQA" which raises "potential risks to our view of the level of government support".
Earlier this month state owned utility company, Adewa, increased its stake in loss-making TAQA, days after it granted the energy company land valued at 18.7 billion dirhams ($5.1 billion).
In Dubai, 26 shares rose, nine declined and the index
The largest listed developer, Emaar Properties
Shares of Qatar's largest petrochemicals maker Industries Qatar
The company attributed the rise in profit to higher product prices and improved operating costs.
Doha's index
Egypt's index
Global Telecom Holding
WEDNESDAY'S HIGHLIGHTS
SAUDI ARABIA
* The index
DUBAI
* The index
ABU DHABI
* The index
QATAR
* The index
KUWAIT
* The index
BAHRAIN
* The index
OMAN
* The index