Saudi Arabia's stock market rebounded sharply on Monday from losses suffered in the wake of the disappearance of dissident journalist Jamal Khashoggi, as local institutions bought shares actively.
The Saudi index - which had plunged 7.2 percent in the previous two days on fears that Khashoggi's case could trigger U.S. sanctions against Riyadh and shrink inflows of foreign investment - jumped 4.1 percent in heavy trade, erasing Sunday's losses.
But Saudi-based analyst Khaled Feda said the market had overreacted to the Khashoggi case on Sunday, creating attractive opportunities to purchase blue chips. Foreign investors were keen buyers on Monday, he said.
The banker said investors were encouraged by news that King Salman had ordered an internal investigation into Khashoggi's disappearance after he visited the Saudi consulate in Istanbul, which could hasten the process of resolving the crisis. Turkish officials allege Saudi agents killed Khashoggi, which Riyadh denies.
The Saudi rial fell to its lowest level against the dollar in the spot market for two years on Monday, while Riyadh's international bond prices slipped. But the drops were much smaller than some bouts of instability caused by low oil prices in the last several years.
Petrochemical and bank stocks lifted the index. The Gulf's biggest petrochemical producer, Saudi Basic Industries , rose 3.7 percent.
Sahara Petrochemical added 6.9 percent after saying a unit had started marketing polypropylene made by affiliate Al-Waha Petrochemicals in the region.
Saudi Industrial Export jumped 10 percent as trade in the rights to its equity issue began.
Meanwhile, Oman's index dropped 0.8 percent after a slew of corporate earnings from its banks. Bank Muscat slid 1.9 percent despite reporting a rise in profit for the nine months ended Sept. 30.
Al Anwar Ceramic Tiles dropped 5.9 percent after its profits fell during the same period.
The Egyptian blue-chip index shed 0.1 percent but Madinet Nasr for Housing and Development jumped 7.7 percent, continuing a surge that began on Sunday when Sixth of October Development and Investment (SODIC) said it aimed to take over Madinet by exchanging one of its shares for two Madinet shares.
Arqaam Capital said the ratio was more favourable than expected for shareholders in Madinet; SODIC plunged nearly 10 percent on Monday.
In Dubai, the index edged down 0.03 percent as real estate and industrial shares reversed early gains to trade lower.
Qatar's index was up 0.1 percent on a 2.7 percent rise in Industries Qatar and a 0.4 percent increase in Qatar Electricity and Water after it signed a 15-year service agreement with Japan's Mitsubishi Hitachi Power Systems for 360 million riyals ($96 million). SAUDI ARABIA * The index gained 4.1 percent to 7,568 points. DUBAI * The index shed 0.03 percent to 2,713 points. ABU DHABI * The index rose 0.04 percent to 4,933 points. QATAR * The index was up 0.1 percent to 9,834 points. KUWAIT * The index rose 0.9 percent to 5,205 points. BAHRAIN * The index edged up 0.01 percent to 1,316 points. OMAN * The index lost 0.8 percent to 4,461 points. EGYPT * The index slipped 0.1 percent to 13,521 points.
(Additional reporting by Davide Barbuscia; Editing by Andrew Torchia and David Stamp)
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