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DUBAI, June 20 (Reuters) - Saudi Arabia's stock market continued rising early on Tuesday before a decision by index compiler MSCI on whether to consider Riyadh for a possible upgrade to emerging market status. Most of the rest of the Gulf was sluggish.
MSCI will announce its decision after the close. The Saudi index rose 0.5 percent in the first half-hour; it had surged 2.4 percent on Monday after Mohammed El-Kuwaiz, vice chairman of the Capital Market Authority, was quoted as saying by the Asharq al-Awsat newspaper that he expected Riyadh to be upgraded by the end of 2018.
That would be faster than the mid-2019 date which MSCI's past practice would suggest. Tuesday's rise was broad-based, with nine of the 10 most heavily traded stocks gaining.
Petrochemical blue chip Saudi Basic Industries, which would be a key Saudi component of MSCI's emerging market index if the upgrade happens, rose 0.8 percent.
Banks were also strong with Banque Saudi Fransi adding 4.2 percent. In a research note, Morgan Stanley argued that the rally in Saudi banks had further to go, saying Riyad Bank and Al Rajhi Bank were underpriced relative to history and that because loan growth in the sluggish Saudi economy was slow, banks would increase dividends.
Dubai's index edged up 0.2 percent as National Central Cooling Co (Tabreed), the most heavily traded stock, jumped 7.1 percent.
It had soared its 15 percent daily limit on Monday, when France's Engie said it had agreed to buy 40 percent of Tabreed for 2.8 billion dirhams ($763 million) from Mubadala.
Qatar's index slipped 0.3 percent as Doha Bank dropped 2.4 percent and Qatar International Islamic Bank lost 2.2 percent.
Qatari banks have been weak because of concern about increases in their funding costs after other Gulf countries imposed sanctions on Qatar early this month, accusing it of supporting terrorism. (Reporting by Andrew Torchia; Editing by Andrew Heavens)