Saudi Shares Drop on Concerns About Europe, Oil Prices

Saudi Arabian shares fell for the second day, led by banks and petrochemical companies, on concern that the euro-area debt crisis may deepen and oil demand subside.

Samba Financial Group (SAMBA) slid to the lowest level since Feb. 1, while Al Rajhi Bank (RJHI), the kingdom’s largest bank by market value, dropped the most in a week. Saudi Basic Industries Corp. (SABIC), known as Sabic, the world’s biggest petrochemical maker, declined 0.5 percent, the most since May 19.

The Tadawul All Share Index retreated 0.7 percent to 7,013.91 at the 3:30 p.m. close in Riyadh. The 152-member index has rallied 9.3 percent this year.

“We expected a weak opening this morning with petrochemicals and banking shares under pressure,” Asim Bukhtiar, a head of research at Riyad Capital, said in response to e-mailed questions. “The euro is expected to further weaken against the U.S. dollar. Combined with neutral to bearish demand outlook, this could mean further declines in crude prices over the week.”

The euro had its biggest weekly loss since December against the dollar as Greek leaders opposed to spending cuts gained in the polls and amid a deepening crisis in Spain. The shared currency fell for a fifth week versus the yen, the longest stretch since October, as German manufacturing shrank and the Bank of Japan (8301) refrained from adding stimulus to the economy.

European leaders failed to come up with a plan at a summit May 23 to resolve their debt crisis as wagers grew that Greece would abandon the euro. Crude oil fell for a fourth week. July futures touched $89.28 a barrel in New York on May 23, the least since November.

Samba dropped 2.1 percent to 46.7 riyals. Al Rajhi declined 1 percent to 72.5 riyals. Sabic fell 0.5 percent to 94.5 riyals.

Saudi Arabia’s stock exchange is the only Persian Gulf bourse operating on Saturdays.

To contact the reporter on this story: Glen Carey in Riyadh at gcarey8@bloomberg.net

To contact the editor responsible for this story: Shaji Mathew at shajimathew@bloomberg.net

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