Saudi Shares Rise to 3-Week High on Earnings Optimism, Europe

Saudi Arabia’s shares rose to the highest in almost three weeks on bets quarterly results will beat estimates and as oil gained after European leaders pledged to create a plan to recapitalize banks to tame the debt crisis.

Saudi Basic Industries Corp. (SABIC), which may post a 45 percent increase in third-quarter profit next week, gained for a third day. Yanbu Cement Co., a Saudi Arabian maker of building materials, advanced the most since August. The Tadawul All Share Index (SASEIDX) climbed 0.6 percent to 6,136.97 at the 3:30 p.m. close in Riyadh, the highest level since Sept. 21. The Bloomberg GCC 200 Index (BGCC200) added 0.2 percent.

“On the domestic front so far the earnings that have come through have been positive; optimism is building up for Sabic,” said Asim Bukhtiar, an equity analyst at Riyad Capital. “There seems to be some light at the end of the tunnel that the European debt crisis is actively being worked on and there could be a resolution.”

Saudi Arabian companies have posted higher third-quarter results since the earnings season began last week. Saudi Arabian Fertilizer Co., a unit of Saudi Basic, yesterday said profit doubled, beating analysts’ estimates. Saudi Basic, the world’s biggest petrochemicals maker, may say profit rose to 7.7 billion riyals after 5.33 billion riyals in the year-earlier period, according to the median estimate of four analysts compiled by Bloomberg.

Saudi Basic shares gained 0.5 percent to 92.25 riyals, the highest since Sept. 28.

Yanbu Cement (YNCCO) rallied 3.6 percent, the most since Aug. 23, to 58 riyals. The company posted a 33 percent increase in third- quarter profit on Oct. 5 as sales rose on higher demand.

Awaiting Sabic

The STOXX Europe 600 Index gained 0.5 percent at 2:12 p.m. in London and S&P 500 futures increased 1.3 percent. German chancellor Angela Merkel and French President Nicolas Sarkozy set an end-of-October deadline to devise a plan to recapitalize banks, get Greece on the right track and fix Europe’s economic governance.

Crude for November delivery jumped as much as 2.3 percent to $84.92 a barrel in electronic trading on the New York Mercantile Exchange. The Gulf Cooperation Council, which includes Saudi Arabia and the United Arab Emirates, holds more than a third of the world’s proven oil reserves, according to data from BP Plc.

Qatar’s QE Index (DSM) advanced 0.2 percent and Oman’s MSM 30 Index gained less than 0.1 percent. Dubai’s DFM General Index (DFMGI) declined 0.6 percent and Bahrain’s BB All Share Index fell 0.9 percent. Kuwait’s gauge and Abu Dhabi’s ADX General Index (ADSMI) lost less than 0.1 percent.

To contact the reporter on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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