Gulf markets rise after global uptick

Stock markets in the oil-rich Gulf region recovered on Wednesday as global markets were rejuvenated by the US Federal Reserve pledge to keep interest rates near zero for at least two years.

The Dubai Financial Market index closed 1.15 per cent up after it had bounced by more than two per cent in the first 15 minutes of trading, with leading shares rising after being mostly in the red since the trading week began.

DFM closed at 1,460.96 points following a wave of profit-taking sales. The shares of giant Emaar Properties closed 1.45 per cent up after surging 2.91 per cent in earlier trading.

The property developer which built Burj Khalifa, the world's tallest tower, had seen its shares drop by 2.83 per cent on Tuesday.

In neighbouring Abu Dhabi, shares closed 0.96 per cent up at 2,602.50 points after opening in the green. All traded sectors were up, with energy shares jumping 2.85 per cent and property shares rising 1.54 per cent.

The financial market of the capital of the United Arab Emirates had closed 1.34 per cent down on Tuesday.

"Local markets have reacted to the movement in US and European markets," said Wadah Taha, chief investment officer at Al Zarooni Group in Dubai.

He said that the initial surges at opening were "euphoria... which takes place when the reaction is spontaneous after a series of frustrations," adding that profit-taking sales by foreign investors slowed the pace of recovery.

"Foreign investors entered the market late yesterday (Tuesday) and they sold today in quick profit-taking transactions," he said, adding that purchases by foreigners in Dubai and Abu Dhabi on Tuesday amounted to Dh166 million ($45.2 million).

"There was an expectation that the US Fed will come up with a positive action," he added.

Taha insisted that the fundamentals in Gulf markets were strong and that the deterioration was because of panic that trickled down from global markets.

Saudi shares also recovered on Wednesday, with the Tadawul All-Shares Index (TASI) increasing 1.66 per cent in the first 15 minutes of trading.

It traded 0.84 per cent up in the afternoon at 6,059.43 points, after it closed 0.81 per cent down on Tuesday.

The largest Arab bourse shed 5.46 per cent of its value on Saturday after being the first market to feel the impact of Friday's historic downgrading of the US credit rating by Standard & Poor's.

The Saudi index of petrochemical companies rose by 2.51 per cent, with leading SABIC shares recovering by 2.6 per cent in morning trading. But the sector reduced gains to 0.49 per cent and those of SABIC dropped to 0.78 per cent.

Muscat Securities Market in Oman also opened positively, increasing 0.87 per cent to 5,945.23 points after shedding 2.42 per cent of its value on Tuesday.

But it closed 0.2 per cent down in the red at 5,882.30 points.

Kuwait Stock Exchange closed up 0.32 per cent at 5,900.8 points. It had opened in the green, trading 0.58 up per cent during the day, after closing 1.25 per cent down on Tuesday.

Qatar Exchange, the second largest Arab bourse, also bounced back from the red, closing 0.7 per cent up at 8,127.54 points after closing 1.76 per cent down on Tuesday.

Asian markets rallied on Wednesday following a bounce by US and European markets late on Tuesday after the US Fed announcement.

Wall Street staged an impressive rally in the final minutes of New York trade, with the Dow finishing up 3.98 per cent, or 430 points, at 11,239.77. The index had been 200 points down 45 minutes before the close.

The broader S&P 500 climbed 4.74 per cent, while the tech-heavy Nasdaq jumped 5.29 per cent.

Those gains came on the heels of a turnaround in Europe, where falls as large as six per cent were reversed.

London's FTSE-100 index gained 1.89 per cent on Tuesday and in Paris the CAC-40 rose 1.63 per cent. In Frankfurt the DAX slipped 0.10 per cent.

European stocks continued their rally on Wednesday as London's FTSE-100 jumped as much as 1.8 per cent before reducing profits to 1.01 per cent up after the Bank of England downgraded its 2011 British economic growth forecast.

Frankfurt's DAX 30 leapt more than two per cent.

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