September 5, 2018 / 2:02 PM / 2 months ago

MIDEAST STOCKS-Saudi index drops below 200-day average amid emerging markets sell-off

* Saudi’s main index falls below key technical support

* Index drops below 200-day average for first time this year

* Abu Dhabi, Dubai stocks also hit by emerging markets sell-off

By Andrew Torchia and Tom Arnold

DUBAI, Sept 5 (Reuters) - Saudi Arabia’s main stock index fell below major technical support for the first time this year on Wednesday, leading declines in Middle East stocks as the region was swept up in a broader emerging markets sell-off.

Investor sentiment was gloomy across emerging markets, with the MSCI emerging market index down 1.3 percent as a result of worries about a potential escalation in the U.S.-China trade conflict and the health of emerging markets such as Turkey and Argentina.

Saudi Arabia’s stock index dropped 3.9 percent in late trade, falling below its 200-day average for the first time this year. The index closed 3.1 percent down.

“With foreigners selling off on the back of the emerging markets worries, margin calls were triggered in Saudi,” said Marie Salem, director of capital markets at FFA Dubai.

Blue chip names which have surged in recent months on expectations of foreign fund inflows were hard hit, with Saudi Basic Industries Corp closing 4.4 percent and Al Rajhi Bank falling 3.0 percent.

The latest monthly Reuters poll of Middle East fund managers at the end of last month found many were becoming much less positive on Saudi Arabia because of rich valuations and broader emerging market concerns.

Investors also fretted about a retreat in oil prices, with Brent crude, the global benchmark, falling 0.98 percent to $77.44 a barrel by 1252 GMT.

Egypt’s main index slipped 1.1 percent, with real estate investment firm Talaat Mostafa Group Holding Co declining 2.3 percent.

First Abu Dhabi Bank, the largest bank in the United Arab Emirates, acted as the biggest weight on Abu Dhabi’s index, dropping 2.8 percent.

Abu Dhabi Commercial Bank dropped 4.6 percent. It said on Monday it was in early merger talks with Union National Bank and separately with unlisted Al Hilal Bank.

UNB added to double-digit gains on Tuesday to rise a further 11.7 percent, reflecting analysts’ expectations that it will gain the most from a potential merger.

The Abu Dhabi stock index fell 1.1 percent.

In Dubai, Emaar Properties was the main drag on the index, with the stock falling 1.8 percent. The emirate’s index slipped 0.7 percent.

SAUDI ARABIA * The index fell 3.1 percent to 7,719 points. DUBAI * The index slipped 0.7 percent to 2,818 points. ABU DHABI * The index lost 1.1 percent to 4,928 points. QATAR * The index rose 0.1 percent to 9,830 points. KUWAIT * The index was up 0.3 percent at 5,294 points. BAHRAIN * The index fell 0.2 percent to 1,335 points. OMAN * The index was flat at 4,429 points.

EGYPT * The index fell 1.1 percent to 15,751 points.

Additional reporting by Saeed Azhar in Dubai; Editing by Alison Williams

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