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MIDEAST STOCKS-Saudi extends slide as global outlook darkens

Tuesday, 9 Oct 2012 | 11:09 AM ET

By Praveen Menon

DUBAI, Oct 9 (Reuters) - Saudi Arabia's benchmark slumped to a fresh 10-week low on Tuesday as investors fretted that a gloomier outlook for the global economy would lead to lower oil receipts for the world's top crude exporter.

Other Middle East markets were mixed, with investors cautious as third-quarter earnings season got under way.

The International Monetary Fund cut its growth forecasts for the second time in six months on Tuesday, warning the global economic slowdown was worsening.

"This will obviously put some pressure on (Saudi Arabia's) petrochemical sector," said Farouk Miah, head of research at NCB Capital. "Fundamentally, there are concerns and added to that are the geopolitical issues that are continuing in the region."

Saudi's index fell 0.3 percent, its fourth decline in five sessions to take its losses since Sept. 15's four-month high to 5.2 percent. Oil has fallen 8.7 percent over the same period.

The petrochemicals' benchmark eased 0.08 percent, down 5.5 percent for 2012.

"We are in the middle of the earnings season - while the big companies have not reported yet, there are concerns that the Q3 earnings may not be that strong," added Miah.

Banque Saudi Fransi dropped 1.6 percent and Yanbu National Petrochemical Co (Yansab) dipped 0.4 percent.

Egypt's main index fell 0.4 percent to a four-week low, extending losses following Sunday's 2.4 percent decline.

That drop was triggered by President Mohamed Mursi's remarks he would fight corruption and contract violations - comments that left investors worried about the scope for retroactive penalties on companies.

These concerns eased on Monday as Prime Minister Hisham Kandil and other ministers gave upbeat forecasts for Egypt's economy at a conference in Cairo.

"Rumours that led the market down yesterday were denied and the message was very positive for the investors: that Egypt is going to enhance the investment climate," said Mohamed Kotb, director of asset management in Naeem Financial Investment.

Of the 10 most traded stocks in terms of turnover, only Orascom Construction Industries fell, slipping 1.2 percent.

Gainers included investment bank EFG Hermes , up 7.5 percent, and Eastern Tobacco , up 2.9 percent.

In the United Arab Emirates, National Bank of Abu Dhabi (NBAD) rose 0.5 percent after it said the UAE central bank had extended a deadline for banks to comply with new lending limits to state-linked companies.

The original deadline was Sept. 30, but commercial banks will now have an extra six months, NBAD said.

"The deadline extension comes as a relief as banks now don't have immediate concerns of taking provisions against it," said Haissam Arabi, chief executive and fund manager at Gulfmena Investments.

Dubai's index rose 0.08 percent, but gave back early-session gains. It hit a 23-week closing high on Sunday, but fell 1.1 percent the day after.

"We have the third quarter results coming up now and by year-end we may see dividend announcements too. There are enough catalysts coming up and investors are waiting for that," added Arabi.

TUESDAY'S HIGHLIGHTS SAUDI ARABIA * The benchmark fell 0.3 percent to 6,790 points. EGYPT * The measure dipped 0.4 percent to 5,567 points. DUBAI * The index rose 0.08 percent to 1,628 points. ABU DHABI * The index climbed 0.1 percent to 2,651 points. QATAR * The benchmark ended flat at 8,482 points. KUWAIT * The measure slipped 0.02 percent to 5,993 points. OMAN * The index climbed 0.02 percent to 5,663 points BAHRAIN * The measure declined 0.6 percent to 1,062 points.

(Additional reporting by Tom Perry in Cairo, Writing by Matt Smith, Editing by Amran Abocar)

((rachna.uppal@thomsonreuters.com)(+971 4 366 4240)(Reuters Messaging: rachna.uppal.reuters.com@reuters.net))

Keywords: MIDEAST MARKETS/WRAP