MIDEAST STOCKS-Saudi shares up to fresh 15-mth high on Q2 optimism; Egypt down

DUBAI, July 7 Sun Jul 7, 2013 10:16am EDT

DUBAI, July 7 (Reuters) - Saudi Arabia's bourse rose to a fresh 15-month high on Sunday as investors bought on second-quarter earnings optimism and most other Gulf markets also rose, while Egyptian shares slipped off a one-month high.

The Saudi benchmark rose 0.6 percent to its highest level since April 2012 but trading volumes were thin in typical summer doldrums.

Most petrochemical shares gained, lifting the sector's benchmark up 0.7 percent.

"We have an optimistic forecast for petrochemicals with expectations of growth between 15 and 20 percent year-on-year for the second quarter," said Abdullah Alawi, assistant general manager and head of research at Aljazira Capital.

Alawi said Saudi Basic Industries Corp (SABIC) has underperformed and its diverse portfolio would give it a competitive edge and a larger growth potential. Shares in the world's largest chemical producer rose 0.5 percent.

Riyad Bank posted estimate-beating 5.9 percent gain in its second-quarter net profit, helping lift sentiment across the sector. Bank shares, however, slipped 0.2 percent, trimming 2013 gains to 8 percent.

"The combination of good loan growth and lower provisions led to the good results," NCB capital said in a note. "The read across for the other banks is that fee income is likely to be high while provisions for most banks will decline."

In the UAE, Dubai's measure added 0.7 percent, extending 2013 gains to 40.5 percent but trading volumes dropped to their lowest in 11 weeks. Abu Dhabi's index climbed 0.5 percent, trading in a tight range since it edged off a 56-month peak in June.

Investors are waiting for second-quarter earnings, which will start later this month. The Muslim holy month of Ramadan, beginning mid-week, is likely to keep a damper on volumes.

"Banks in general will show strong results and higher quarter-on-quarter will encourage investors accumulate shares because they will justify higher profit for the year," he added.

The banking sector has seen a recovery in recent quarters as loan growth picks up and lenders restructure government-related debt that has been weighing on investor sentiment since the 2008 credit crunch.

In Egypt, Cairo's benchmark retreated 0.4 percent to 5,312 points from a one-month high as the index faced chart-resistance and investors booked gains from a recent rally.

The market rose to 5,413 points intraday, near the June peak. An uncertain political outlook remains following the ouster of President Mohamed Mursi as the military struggles to appoint an interim prime minister and death toll from mass protests rises.

Local investors, who were buyers in the recent rally, joined foreigners as net sellers on Sunday, according to exchange data.

Analysts say local sentiment is mixed as worries of further protests outweigh optimism on the awaited appointment of a new prime minister.

Mursi's Muslim Brotherhood movement called for further protests on Sunday after dozens of people were killed and more than 1,000 wounded on Friday in clashes between his supporters, opponents and the military.

Egypt's foreign reserves fell by $1.12 billion in June to $14.92 billion, the central bank said on Sunday, heightening the dire state of the country's finances.

SUNDAY'S HIGHLIGHTS

EGYPT

* The index slipped 0.4 percent to 5,312 points.

SAUDI ARABIA

* The index rose 0.6 percent to 7,717 points.

DUBAI

* The index climbed 0.7 percent to 2,280 points.

ABU DHABI

* The index gained 0.5 percent to 3,581 points.

KUWAIT

* The index advanced 0.3 percent to 7,986 points.

OMAN

* The index ticked up 0.1 percent to 6,447 points.

QATAR

* The index slipped 0.1 percent to 9,363 points.

BAHRAIN

* The index gained 0.2 percent to 1,193 points.

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