Middle East markets muted as unrest keeps investors away

Gulf Markets were mixed in lacklustre trade on Thursday as investors stayed away with unrest continuing in Libya and oil prices surging over fears of contagion to other major producers in the region. Oil surged more than 7.5 percent to its highest since August 2008. Disruption stemming from the revolt in the world's 12th-biggest exporter has cut at least 400,000 barrels per day from Libya's 1.6 million bpd output, according to Reuters calculations.
"Political instability and fear of a contagion continues to worry investors," said Haissam Arabi, chief executive and fund manager at Gulfmena Alternative Investments. "The political situation will take precedence over the fundamentals." The return of Saudi Arabia's King Abdullah and the unveiling of a $35 billion social spending programme was expected boost regional sentiment. However, the Saudi market closed on a low on Wednesday before going on a three-day weekend to celebrate the return of the king.
"In an ideal world the Saudi announcements should have boosted the market but it fell and the reason has to be the political uncertainty," said Arabi, adding that he expected this to impact regional bourses. Hundreds of people have backed a Facebook call for a Saudi "day of rage" on March 11 to demand an elected ruler, greater freedom for women and the release of political prisoners.
Bahrain's index dropped 2.7 percent. Ahli United Bank, one of two Bahraini banks that rating agency Standard & Poor's has said it may downgrade, fell 7 percent. Batelco dropped 4.8 percent. About a total 300,000 shares of the two companies were traded. Dubai's index shed gains from a rally on the previous day, falling 1.3 percent, as investors booked profits fearing further unrests over the weekend. Emaar Properties fell 1.3 percent and Arabtec dropped 2.7 percent.
Kuwaiti telecoms firm Zain climbed 3 percent, helping the index end higher for a second session in a row. UAE telecoms operator Etisalat, bidding for a 46-percent stake in Zain, said a bank deal to finance the $12 billion offer will be done by the end of February.