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DFM jumps 4.5% on stronger oil, dividends

Trading volume on Dubai bourse rose on Sunday in a positive technical sign. (File)

By Reuters

Dubai's stock index rose sharply on Sunday after oil prices surged and Saudi Arabia's new King Salman ordered a lavish payout to state employees.

The Dubai benchmark jumped 4.5 percent to close at 3,840 points, its biggest daily gain in six weeks. Trading volume also rose in a positive technical sign.

Conglomerate Dubai Investments led gains and surged 13.8 percent after it said on Sunday that its board had proposed a higher dividend for 2014: 12 percent cash and 6 percent bonus shares. This compared with a 7 percent cash dividend and 7 percent bonus shares in the year-earlier period.

The firm's board also approved the acquisition of a majority stake in investment company Al Mal Capital.

Abu Dhabi's index jumped 2.2 percent on the back of large banks. National Bank of Abu Dhabi surged 4.3 percent, First Gulf Bank rose 2.9 percent and Abu Dhabi Commercial Bank added 3.2 percent. The sector has reported generally strong fourth-quarter results.

"The eight UAE banks under coverage have all reported, with Abu Dhabi Islamic Bank representing the only one of the eight to disappoint in terms of the net profit outturn and recommended distribution," NBAD Securities said in a note on Sunday.

Qatar's bourse rose 1.4 percent in a broad rally.  Industries Qatar, the Gulf's second-largest petrochemicals firm, jumped 2.4 percent.

Markets in Kuwait and Oman added 1.0 and 0.2 percent respectively.

Late on Thursday, Saudi King Salman ordered the immediate payment of two months of bonus salary to all state employees and pension to retired government workers, as well as payments to students.

The payout could be worth up to 70 billion riyals ($18.6 billion) - about 8 percent of the original state budget for 2015, or 2.5 percent of last year's gross domestic product. Additional state spending was allocated to students, civic and professional associations around the country, and upgrading electricity and water services. Indirectly, some of the money is likely to find its way to other countries in the region.

In the oil market, Brent crude surged 8 percent to $52.99 a barrel on Friday after fresh data showed the number of rigs drilling for oil in the United States fell by 7 percent during the week. This strengthened hopes that oil has finally bottomed out.