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Gulf markets slide after US oil hits 6-year low

Gulf markets slide after US oil hits 6-year lowDUBAI: Gulf stock markets fell in panic sell-offs on Wednesday after U.S. crude futures dropped to a fresh six-year low and Brent oil also retreated.

U.S. oil futures dropped about 3 percent and traded just above $ 42 per barrel after crude inventories rose by 10.5 million barrels to 450 million in the week to March 13, according to data from the American Petroleum Institute.

Official inventory data was due to be issued by the U.S. Energy Information Administration (EIA)later on Wednesday. Brent crude was also weak, slipping towards $ 53 per barrel.

Saudi Arabia main index, which has the heaviest weighting of petrochemicals among the Gulf markets, fell 1.8 percent to 9,134 points, although it closed comfortably above its intraday low of 8,888 points.

Saudi Basic Industries, the region’s biggest petrochemical firm, tumbled 4.8 percent in its heaviest trade in five months. Prices for many of its products are linked to oil prices.

Ex-dividend stocks such as Saudi Hollandi Bank and Saudi Cement, which dropped 3.0 and 4.0 percent respectively, also weighed on the market.

Some stocks bucked the negative trend, such as property developer Knowledge Economic City, which surged 6.4 percent in heavy trading on positive technical indicators as it rose above 2014’s peak of 27.80 riyals and ended at 29.10 riyals, an all-time closing high.

UAE, EGYPT

Dubai’s index dropped 3.6 percent to a 10-week low of 3,408 points. All major stocks fell sharply and only a handful of small-caps closed higher.

Emaar Properties, the emirate’s largest listed developer, tumbled 5.3 percent. The company said this week it was not part of a $ 45 billion project to build a new capital city in Egypt, contrary to earlier media reports.

Bourse operator Dubai Financial Market and budget carrier Air Arabia fell 7.3 and 6.3 percent respectively as their shares no longer carried 2014 dividends.

Abu Dhabi’s fell just 1.2 percent thanks to major lender National Bank of Abu Dhabi which rose 2.0 percent ahead of the dividend registration deadline.

Qatar’s bourse dropped 2.2 percent in another broad sell-off and Kuwait fell 0.8 percent. Oman’s market , which closed just before oil’s sharp decline, edged up 0.2 percent.

Egypt’s index fell 0.8 percent to 9,484 points as most stocks declined. The market rally has eased after twice failing this month to break through 9,800 points but is still up 6.2 percent year-to-date.

Like other emerging markets, Egypt may face fund outflows when the U.S. Federal Reserve raises interest rates. After its meeting later on Tuesday, the Fed is widely expected to remove the word “patient” from its statement on the timing of its first hike since 2006, possibly paving the way for policy tightening as early as June.

Copyright Reuters, 2015

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