* OPEC deal could have modest positive impact on state
* Bigger effect on financial market sentiment
* Saudi index hits highest close this year
* Petchems lead, but market's rise is broad-based
* Qatar drilling rig provider GISS leaps
By Andrew Torchia
DUBAI, Dec 1 Petrochemicals companies led Gulf
stock markets higher on Thursday in response to OPEC's first
agreement on output cuts to prop up oil prices since 2008 -- a
deal that could allow governments to ease austerity policies
Expectations for the deal had already boosted oil and Gulf
bourses on Wednesday, but the agreement included bigger
production cuts than many analysts had expected, lifting oil
prices higher on Thursday. Brent crude hit a six-week
high of $52.73 a barrel before retreating slightly.
Saudi Arabia is to take the lion's share of cuts, lowering
production by almost 0.5 million barrels per day (bpd) to 10.06
million bpd, potentially hitting the kingdom's gross domestic
product growth in coming quarters.
But the impact could be outweighed by a boost to Saudi state
revenue from higher oil prices. The original 2016 budget plan
assumed oil revenue of 334 billion riyals ($89 billion). So a 5
percent output cut and a sustained 10 percent price rise after
the OPEC deal could bring in an extra 15 billion riyals.
That would not in itself make a big difference to a budget
deficit that many analysts believe will exceed 250 billion
riyals this year, but it might encourage a modest easing of some
planned austerity policies.
After two years in which Saudi Arabia appeared unwilling or
unable to assert control over the oil market, the OPEC deal
could also help financial market sentiment in general.
"If the OPEC agreement holds, this will be a boon for Saudi
Arabia in terms of revenues and, above all, market confidence,"
said John Sfakianakis, director of economic research at the
Jeddah-based Gulf Research Centre.
The Saudi stock index gained 1.3 percent to 7,094
points, its highest close this year, in heavy trade. It is
technically bullish after confirming on Wednesday a break of
major technical resistance on April's peak of 6,876 points. That
triggered a double bottom formed by this year's lows and
pointing up to 8,400 points in the long term.
The petrochemicals sector, its profit margins most
sensitive to oil, jumped 3.5 percent and five petrochemical
producers were among the 10 most heavily traded stocks.
However, the market's gains were broad-based, with 133
stocks rising and only 20 falling.
The Qatar index climbed 1.2 percent as
petrochemicals company Industries Qatar added 3.7
percent and oil drilling rig provider Gulf International
Services surged by 7.7 percent.
Commercial Bank of Qatar, which this week set out
a turnaround plan aimed at stemming a dismal earnings run,
jumped 3.2 percent.
Stock markets in Kuwait, Oman and Bahrain
also rose. United Arab Emirates markets were closed on
Thursday for a public holiday.
In Egypt, the index climbed 0.8 percent as exchange
data showed that foreigners remained net buyers by a margin of
about $9 million. They have been buyers every day since the
Egyptian pound was floated on Nov. 3.
Global Telecom gained 2.7 percent and investment
firm Qalaa Holdings added 4.1 percent.
* The index rose 1.3 percent to 7,094 points.
* The index gained 0.8 percent to 11,548 points.
* The index rose 1.2 percent to 9,914 points.
* The index gained 0.3 percent to 5,569 points.
* The index surged 1.9 percent to 5,590 points.
* The index rose 0.3 percent to 1,178 points.
(Editing by David Goodman)