DUBAI, Sept 8 (Reuters) - Dubai’s shares led a regional recovery on Sunday as bargain hunters returned to pick up stocks battered over the last two weeks but the spectre of a possible military strike on Syria ensured trading remained volatile.
Dubai’s index climbed 1.5 percent, rallying from a two-month low and snapping a four-session losing streak which had seen the bourse lose 10.1 percent of its value.
The retail-dominated market continued its recent volatile trading pattern, with investors holding stocks for shorter periods given the higher risk premium created by the geopolitical overhang.
Frothy mid-cap shares that were hardest hit in the recent selling led gainers; Union Properties and Air Arabia climbed 4.1 and 4.3 percent respectively.
”The only reason behind the sell off was political, which is not sustainable,“ Mohammad Omran, president of Riyadh-based private firm Gulf Centre for Financial Consultancy, said about Gulf markets.”
“There are opportunities in the market that are attracting buyers because the strike on Syria could take some time.”
U.S. President Barack Obama is waiting for a pivotal Congressional vote for a limited strike on Syria, while European Union foreign ministers have urged Washington to wait for a report from United Nations weapons inspectors before making any military response..
The detailed report from the U.N. is expected in a week; final votes in Congress could come after the U.N. report is announced.
Shares in heavyweight lender Emirates NBD surged 6.8 percent after four sessions of losses. Analysts say investors are more likely to rotate investments into bluechip shares during periods of political uncertainty.
Abu Dhabi’s measure bucked the regional trend, slipping 0.3 percent to its lowest finish since June 26.
Elsewhere, Kuwait’s bourse snapped a 10-session losing streak, rising 0.3 percent. Qatar’s index advanced 0.6 percent, halting a four-session drop and recovering from a 10-week low.
In Saudi Arabia, the measure ended flat near Thursday’s two-month low after giving back the day’s gains.
Market turnover was relatively high during the recent sell-off. Sunday’s buying demand was muted in comparison and any recovery will be fragile unless trading volumes increase.
“If the attack takes place, the market could react in funny ways and rally,” said John Sfakianakis, chief investment strategist at Saudi investment firm MASIC. “You could have people saying OK, the event has happened so the uncertainty has lessened. Once we are done with this, there will be upside potential because local fundamentals are still solid.”
Gains in petrochemical shares, with the index 0.3 percent higher, were offset by declines in banks - the sector measure declined 0.5 percent.
Higher oil prices are supporting petrochemical stocks. U.S. crude oil futures settled on Friday at their highest level in more than two years.
Saudi petrochemical stocks tend to track oil prices, with crude impacting their bottom line.
In Egypt, the index added 0.3 percent, with a handful of stocks helping lift the bourse.
Heavyweight Commercial International Bank climbed 1 percent. Locals were net buyers, according to bourse data.
* The index rose 1.5 percent to 2,371 points.
* The index slipped 0.3 percent to 3,528 points.
* The index gained 0.3 percent to 7,238 points.
* The index climbed 0.6 percent to 9,258 points.
* The index ticked up 0.02 percent to 7,636 points.
* The index gained 0.3 percent to 5,186 points.
* The index advanced 0.6 percent to 6,452 points.
* The index ticked up 0.06 percent to 1,182 points.