* Prospect of VAT, other austerity steps dampens mood
* Saudi petrochemical sector stays sluggish
* Alawaal Bank climbs after quarterly earnings rise
* Qatar’s Woqod holds major technical support
* Egypt Chemical Industries up for third day post-earnings
By Andrew Torchia
DUBAI, Nov 1 (Reuters) - Gulf stock markets mostly moved sideways on Wednesday, drawing little strength from rising oil prices, while Egypt pulled back after closing at record highs for three straight days.
Brent oil futures rose to $61.70 per barrel, their highest since July 2015, while global equity markets continued climbing. The failure of Gulf bourses to rise on the back of these trends showed how gloomy investors have become about economic growth in the region.
Governments’ budget deficits will shrink substantially if oil stays above $60, but authorities are expected to continue austerity policies such as the introduction of a 5 percent value-added tax as soon as January. These are expected to keep growth modest in 2018 and weigh on companies’ profit margins.
The Saudi stock index rose 0.2 percent as top Saudi petrochemical producer Saudi Basic Industries edged up only 0.1 percent.
Higher oil prices tend to be positive for profit margins at Saudi petrochemical firms but the industry faces the possibility of domestic electricity and fuel price hikes within months and higher gas feedstock prices as soon as in 2019.
National Petrochemical fell 2.1 percent after reporting a marginal rise in quarterly net profit to 196.9 million riyals ($53 million) from 191.6 million riyals a year earlier.
Real estate firm Dar Al Arkan surged 3.1 percent and City Cement edged up 0.1 percent. It reported that quarterly profit fell sharply to 19.2 million riyals from 32.9 million riyals, but beat a forecast of 8.60 million riyals by Aljazira Capital.
Alawaal Bank added 0.9 percent after its profit jumped to 363 million riyals from 262.8 million riyals, largely because of a drop in loan impairment charges after several quarters of high charges. EFG Hermes had forecast 367 million riyals and NCB Capital, 295 million riyals.
Islamic insurer Solidarity rose 1.4 percent after reporting a 39 percent rise in quarterly profit before zakat, or Islamic tax, although gross written premiums fell sharply.
In Dubai, the index was almost flat as Emaar Properties rebounded 0.6 percent. On Thursday, it is expected to announce the indicative price range for an initial public offer of shares in its local property development unit.
Qatar’s index edged up 0.1 percent but Qatar Fuel Co (Woqod) fell 1.2 percent to 91.91 riyals, testing and holding major technical support on its January 2016 low of 91.74 riyals.
The fuel products distributor, which last week reported a 17 percent drop in nine-month net profit, has been in a downtrend since January.
The best-performing market in the Gulf was Oman, where the index climbed 0.8 percent on the back of gains in two blue chips: National Bank of Oman, up 2.7 percent after trading at multi-year lows, and Omantel, up 1.3 percent.
Egypt’s index fell 0.5 percent but Egypt Chemical Industries, which has been rising since it reported a more than doubling of quarterly net profit on Monday, gained a further 3.9 percent.
* The index rose 0.2 percent to 6,948 points.
* The index edged down 0.03 percent to 3,635 points.
* The index edged up 0.1 percent to 4,485 points.
* The index edged up 0.1 percent to 8,171 points.
* The index fell 0.5 percent to 14,277 points.
* The index added 0.3 percent to 6,530 points.
* The index rose 0.2 percent to 1,279 points.
* The index climbed 0.8 percent to 5,049 points. (Reporting by Andrew Torchia; Editing by Susan Fenton)