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Saudi Arabia’s Shares Gain Most in Two Weeks on Oil; Dubai Drops

May 9 (Bloomberg) -- Shares in Saudi Arabia, the world’s largest oil exporter, gained the most in two weeks after crude rebounded from the biggest weekly drop since 2008. Dubai’s index fell after Dubai Financial Market PJSC’s profit plunged.

Saudi Basic Industries Corp., the world’s biggest petrochemicals maker, rose the most in two weeks. Saudi Arabian Fertilizer Co., known as Safco, advanced the most since March. The Tadawul All Share Index climbed 0.8 percent, the most since April 25, to 6,673.26 at the 3:30 p.m. close in Riyadh. In Dubai, the DFM General Index fell to the lowest since April 11.

“A strong rebound in oil prices has helped persuade investors that Saturday’s sell-off in Saudi petrochemicals was overdone,” said Amro Halwani, a senior trader at Shuaa Capital PSC in Riyadh. “Driven by China and other emerging nations, the appetite for commodities remains firm with a floor on oil prices near $100 likely to stay in place as long regional geopolitical tensions persist.”

Crude for June delivery increased as much as 3.6 percent to $100.69 a barrel in electronic trading on the New York Mercantile Exchange. The contract tumbled 15 percent last week to the lowest settlement since March 15. Saudi Arabia’s petrochemical exports rose 31 percent to 4.7 billion riyals ($1.3 billion) in March from a year earlier on higher prices and increased demand from Asia.

Dubai Drops

Sabic rose to 108.75 riyals. Safco, the unit of Sabic, advanced 1.4 percent, the most since March 30, to 180 riyals.

The DFM General Index lost 0.2 percent to 1,588.11 as about 80 million shares traded compared with a six-month daily average of 121 million.

Dubai Financial Market, the only Gulf stock market to sell shares to the public, dropped 3.1 percent to 1.27 dirhams, the lowest since March 17. First-quarter net income tumbled 96 percent to 2.18 million dirhams ($594,000).

“In addition to weak first-quarter earnings for DFM, the lack of volume is depressing investor sentiment,” said Tariq Qaqish, director and fund manager at Al Mal Capital PSC in Dubai. “However, the United Arab Emirates’ macro picture is improving, forecasts for 2011 gross domestic product growth are encouraging. Valuations at those levels should attract medium to long term investors.”

Economic growth in the U.A.E. will accelerate to 3.3 percent this year from 3.2 percent in 2010, the International Monetary Fund said in its World Economic Outlook last month. Dubai’s benchmark stock index, down 2.6 percent this year, trades at estimated price to earnings of 8.4 times, according to data compiled by Bloomberg. That compares with 11.4 for the MSCI Emerging Markets Index.

The ADX General Index and Bahrain’s measure retreated 0.4 percent, while Oman’s MSM30 Index lost 0.3 percent. Qatar’s gauge climbed 1 percent, Kuwait’s SE Price Index gained less than 0.1 percent and the Bloomberg GCC 200 Index increased 0.4 percent.

To contact the reporter on this story: Zahraa Alkhalisi in Dubai at zalkhalisi@bloomberg.net

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

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