DUBAI: Saudi Arabia and other Gulf markets failed to reflect strength in oil prices on Thursday, with geopolitics continuing to weigh on investor sentiment, though Saudi bank Alawwal soared again on its merger plans.
Investor activity was also slow because of the Muslim fasting month of Ramadan, traders said.
The Saudi index edged up by only 0.1 percent despite Brent crude futures moving ever closer to $80 a barrel, their highest since 2014, as supplies tighten and demand remains strong.
The market also ignored an announcement from Equity index compiler S&P Dow Jones, which said it was consulting investors on whether to upgrade Saudi Arabia to emerging market status, highlighting growing fund manager interest in the kingdom.
Foreign investors have been selling Saudi Arabian equities, exchange data showed, partly because of geopolitical tension since US President Donald Trump said he was pulling out of the Iran nuclear deal.
Shares of Saudi Arabia's Alawwal Bank, however, bucked the trend in early trading with a 4.1 percent gain to 14.50 riyals in heavy volumes after a 10 percent jump on Wednesday.
Alawwal has reached a preliminary, non-binding agreement to merge with HSBC-backed Saudi British Bank to create Saudi Arabia's third-biggest bank with assets of about $77 billion.
Saudi British Bank's shares fell by 2.5 pct to 31.20 riyals, extending losses for a second day.
In Abu Dhabi, real estate developers Eshraq Properties and Aldar Properties were the most heavily traded shares, losing 1.4 percent and 0.4 percent respectively. Dana Gas was also heavily traded but the price held steady.
Abu Dhabi's index eased by 0.4 percent.
In Dubai, the index was down 0.5 percent, dragged lower by Emaar Properties and subsidiary Emaar Developpement, down 1.3 percent and 0.9 percent respectively.
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