DUBAI, April 15 The Saudi bourse suffered its biggest daily drop in eight months on Sunday following heavy losses in bluechip stocks as traders booked gains from this year's surge following disappointing earnings from petrochemical producers.
Most Gulf markets fell as weakening oil prices and a downbeat end to the trading week on global bourses dampened regional sentiment.
The Saudi index dropped 2.3 percent to 7,348 points, its largest decline since August 2011. The benchmark has fallen 7.3 percent since April 3's three-and-a-half year peak.
"We were disappointed with petrochemicals' results, we thought they would have been able to drive the market through 8,000 points," said Hesham Tuffaha, Bakheet Investment Group head of asset management.
"The market will most likely rebound in the coming days after the over-selling that happened today. There are a lot of investors coming into the market."
Petrochemical earnings fell short of expectations because a lack of transparency from firms made it difficult for analysts to make estimates and also due to weaker-than-anticipated global demand for petrochemical products, Tuffaha said.
Saudi Basic Industries Corp. (SABIC) dropped 3.9 percent after going ex-dividend, Saudi Telecom fell 3 percent and Kingdom Holding slid 2.5 percent.
"If you compare the Saudi market to its peers, it's still attractive," added Tuffaha.
In Dubai, telecom firm du jumped 14.5 percent after 2.4 million shares changed hands in a trade made in the final minute before the market closed.
The telecoms operator traded 3.8 million shares on the day, slightly above the 30-day daily average. Du's shares have gained 23 percent since April 9.
"Some traders say it's an error but I don't think that is the case," said Saad al-Chalabi, a technical analyst for institutional equities at Al Ramz Securities.
"We think it was a legitimate trade," he said, adding that no further information was available on the transaction.
"Most believe du's first-quarter earnings will be really good.... good margins are expected," said Samer al-Jaouni, general manager of Middle East Financial Brokerage Co.
Analysts polled by Reuters on average forecast du's first-quarter profit would rise by 36 percent.
Dubai's index slipped 0.2 percent in muted trade, cutting its 2012 gains to 23.8 percent.
Dubai stocks had mounted an early-year surge to rally from historical lows and many investors are now waiting to see if company earnings can justify these gains.
"The key thing to look out for from a medium-term perspective is how real estate-linked names such as Tamweel and Deyaar perform," said Ibrahim Masood, senior investment officer at Mashreq bank.
"Anecdotal evidence suggests there's some recovery and if there are signs of that in the operating performance of these companies it will be a massive positive. Recovery would mean some stability, with people looking to transact and liquidity coming back to the sector."
Islamic mortgage lender Tamweel surged 8.3 percent, accounting for more than a third of turnover. The stock is a favourite target for day-traders and among the most volatile in Dubai.
Property developer Deyaar lost 0.8 percent, builder Arabtec dropped 2.9 percent and contractor Drake & Scull dipped 2 percent.
Dubai house prices have fallen more than 60 percent from a 2008 peak.
* The benchmark fell 2.3 percent to 7,348 points.
* The index dipped 0.2 percent to 1,675 points.
* The benchmark dropped 0.4 percent to 2,512 points.
* The index fell 0.5 percent at 8,739 points.
* The index rose 0.4 percent to 6,003 points.
* The measure climbed 0.5 percent to 6,217 points.
* The measure rose 0.2 percent to 1,138 points. (Additional reporting by Praveen Menon, Editing by Firouz Sedarat)