MIDEAST STOCKS-Muslim Brotherhood leader's arrest boosts Egypt
* Foreign investors not convinced that crackdown is positive
* But many locals happy to see strong action vs Brotherhood
* Saudi Arabia pledges more aid to Egypt if needed
* Union Properties continues surge in Dubai
* Barwa Real Estate rebounds in Qatar
By Nadia Saleem
DUBAI, Aug 20 (Reuters) - Egypt's bourse snapped a three-session losing streak on Tuesday after authorities arrested Muslim Brotherhood leader Mohamed Badie, raising hopes among some investors that the government would succeed in dampening down unrest.
In the view of many foreign investors, Badie's arrest may do nothing to resolve Egypt's long-term political tensions; it may simply make a negotiated settlement and an eventual transition back to civilian rule more difficult. For those reasons, the stock market may not be starting any extended rally.
But many local investors approved of last month's ouster of the Brotherhood's President Mohamed Mursi, believing it would clear the way for better management of the economy. They have been encouraged by the government's action against top Brotherhood leaders.
Egyptian investors were net buyers of stocks on Tuesday while foreigners remained net sellers, bourse data showed.
Cairo's main stock index climbed 1.1 percent, ending three days of declines in which it tumbled 5.6 percent as hundreds of people died during the crackdown on the Brotherhood.
"The main catalyst was the crackdown on the MB and the arrest of their leader," said Islam Batrawy, deputy director of institutional sales trading at Naeem Brokerage in Egypt. But he added: "Investors are waiting for the country's security situation to normalise after the recent tensions."
The exchange resumed a normal four-hour trading session on Tuesday after closing last Thursday and shortening trading hours for two days this week to give employees more time to obey a curfew.
Blue chips Commercial International Bank and Orascom Telecom advanced 1.1 and 1.2 percent respectively. Second-quarter earnings quality at some companies "has been good and is helping people take positions again", Batrawy said.
The mood was also buoyed by Saudi Arabia's pledge late on Monday to provide more financial assistance to Egypt if needed to offset any aid cutbacks from Western nations - confirmation that wealthy Gulf states view Egypt's stability as a geopolitical priority.
The Gulf aid will not by itself restore healthy economic growth, but it should succeed in preventing the balance of payments and state budget collapses that seemed possible under Mursi.
In the United Arab Emirates, Dubai's index eased 0.06 percent; it is up 64.2 percent year-to-date but has been trading narrowly since it hit a 57-month closing high on Aug. 6.
Monthly trading volumes in Dubai have been declining since a May peak, even as the market touched new multi-year highs. This may be at least partly due to Ramadan and summer holidays, but could be a negative technical signal.
"The market is making new highs but the momentum is not confirming - the trend is weak," said Firas Al Zghaibi, financial markets strategist at brokerage MENA Corp. "The outlook from here is bearish but in the short term, the index might try to make new highs."
Many other analysts have a bullish long-term outlook because of improving corporate earnings, the United Arab Emirates' upgrade to emerging market status by MSCI, and hopes that Dubai will in November win the right to host the World Expo 2020.
Small-cap Union Properties surged 7.2 percent on Tuesday, accounting for nearly half of all trading as it played catch-up to the market's gains this year. The stock is up 24 percent year-to-date; it rose 18.3 percent this week.
Al Zghaibi said the market usually topped after laggard stockss had played catch-up.
Qatar's measure moved little but traded up to a new five-year high. Barwa Real Estate led trading, rising 2.0 percent and gaining for a third consecutive session as buyers returned to the stock.
Barwa tumbled earlier in August after reporting a slump in first-half earnings; the stock is down 4.5 percent year-to-date against the wider market's 20.2 percent rise.
Elsewhere, Saudi Arabia's measure declined 0.3 percent, coming off a 59-month high. Banks weighed with the sector's index down 0.4 percent. Cement, food and agriculture shares also dropped.
Oman climbed 0.4 percent to 6,924 points. Data on Tuesday showed bank lending growth rebounded from a three-year low to 7.7 percent in June.
The index faces very strong technical resistance at 7,044 points, which capped the market in April 2010 and January 2011.
* The index rose 1.1 percent to 5,387 points.
* The index eased 0.06 percent to 2,664 points.
* The index edged up 0.06 percent to 3,901 points.
* The index ticked up 0.06 percent to 10,044 points.
* The index slipped 0.3 percent to 8,180 points.
* The index slipped 0.1 percent to 8,123 points.
* The index climbed 0.4 percent to 6,924 points.
* The index eased 0.07 percent to 1,202 points.
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