Arab markets rebound after govt action

KUWAIT CITY (AFP) — Stock markets in the Middle East, including the oil-rich Gulf, rebounded on Monday following a series of local and international measures to try to ease the global financial crisis.
The Saudi market, the largest in the Arab world, soared 7.7 percent at the opening to well above the 6,000-point mark after plunging to a four-year low at the start of the trading week on Saturday.
The Tadawul All-Shares Index was trading at 6,263.92 points, bolstered by a 7.7 percent jump in the leading petrochemicals sector.
On Sunday, monetary authorities cut the repurchase rate by a half percentage point to five percent and reduced to 10 percent the compulsory reserves Saudi commercial banks have to maintain on deposits, thus giving them more freedom to lend.
Gulf stock markets have been on a roller-coaster ride as panicked investors went on a selling spree amid concern about the effect of the global financial meltdown on the region.
Over the year, the Saudi market alone has lost 45 percent.
In the United Arab Emirates, the Dubai Financial Market Index surged 10.53 percent to 3,343.56 points, bolstered by market leader and giant real estate firm Emaar whose shares jumped 15 percent.
The other UAE bourse, the Abu Dhabi Securities Exchange, closed up 6.92 percent at 3,350.22 points, as the key real estate sector leapt 9.3 percent.
The two markets rebounded after a government decision to guarantee deposits and savings and a pledge to protect the country's banking system.
The UAE finance ministry said on Monday that the guarantee also includes foreign banks operating in the country and is valid for three years. However, a banking source said regional banks, including Iranian businesses, would not be part of the deal.
The Kuwait Stock Exchange, the second biggest Arab bourse, was the only exception, closing 0.26 percent down at 11,826.70 after earlier moving into positive territory.
The government in the oil-rich emirate has pumped billions of dollars into the financial system and slashed interest rates by 1.25 percentage points to 4.5 percent in a bid to boost the market.
Monetary authorities in Saudi Arabia, the UAE, Kuwait and Bahrain have slashed interest rates and pledged to pump in billions of dollars to shore up the financial system in the face of the world crisis.
Economists said investor confidence was also shattered because of the massive drop in oil prices, as crude earnings represent more than 80 percent of revenue for the Arab states of the Gulf.
In Asian trade on Monday, New York's main contract, light sweet crude for delivery in November was trading at 80.74 dollars a barrel, recovering from one-year lows reached on Friday.
In gas-rich Qatar, the Doha Securities Market closed 8.45 percent higher at 7,624.09 as all market sectors increased. Oman's Muscat Securities Market closed 5.2 percent up at 7,121.32 points.
Elsewhere, Egypt's key CASE-30 stock index leapt 5.5 percent to 5,794 points in early trade.
The CASE-30, which lost more than 20 percent of its value amid widespread selling on global stock exchanges last week, had finished 3.1 percent down at 5,492 points on Sunday.