September 21, 2017 / 6:07 AM / 10 months ago

MIDEAST STOCKS-Gulf may rise on robust oil, banks may shine on Fed comments

DUBAI, Sept 21 (Reuters) - Stock markets in the Gulf may rise on Thursday after oil prices climbed overnight to a fresh five-month peak and banking shares may be particularly strong after the U.S. Federal Reserve signalled one more interest rate hike by the end of the year.

Brent crude futures rose almost 2 percent on Wednesday to $56.29 a barrel, and stayed near that level on Thursday morning.

The U.S. Federal Reserve left interest rates unchanged on Wednesday but signalled it still expects one more increase by the end of the year.

Most Gulf currencies are pegged to the dollar and any monetary policy change in the United States is usually mimicked by Saudi Arabia, United Arab Emirates and Qatar. A rate hike is considered positive for banks because it lifts their interest rate margins.

Analysts at Riyadh-based Alrajhi Capital said in a note on Wednesday that they expect net interest margins for the banking sector to improve in the third quarter and overall earnings to be “marginally higher”.

Banque Saudi Fransi said on Thursday Credit Agricole, which was majority shareholder in the lender, had confirmed the sale of 16.2 percent of the share capital of BSF to Kingdom Holding for 29.5 riyals ($7.87) per share, in a deal that was announced on Sept. 12.

On the day the deal was announced shares of BSF fell 4.2 percent to 31.60 riyals and Kingdom jumped 5.1 percent. On Wednesday, BSF closed at 31.60 riyals in heavy trade.

Stock markets in the United Arab Emirates and Kuwait are closed on Thursday for the Islamic New Year holiday. (Reporting by Celine Aswad; Editing by Saeed Azhar and Subhranshu Sahu)

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