DUBAI, March 11 (Reuters) - Most Gulf stock markets were higher in early trade on Sunday as a leap by Dubai's biggest bank, Emirates NBD, pulled that index up sharply.
The Dubai index, which had been languishing at two-year lows, climbed 1.3 percent as ENBD, which is usually very thinly traded, soared 13.6 percent to 10.0 dirhams in heavy volume. It broke major technical resistance around 9.0 dirhams, where it had peaked several times since mid-2016.
The bank, majority owned by government, said it would ask shareholders on March 27 to approve a capital increase through the issuance of up to 7.35 billion new shares at a discount of at least 10 percent to the prevailing market price, with preference to existing shareholders. It currently has about 5.5 billion shares.
ENBD said in January it had started initial strategic discussions with Russia's Sberbank about a possible purchase of Sberbank's stake in Turkey's Denizbank, and analysts believe the capital increase is a signal that the acquisition will go ahead.
Chiradeep Ghosh, research manager at SICO Bahrain, said ENBD shares were reacting positively to the capital increase plan because to raise so much new capital, the bank would probably have to raise its 5 percent ceiling for foreign ownership of the shares. Actual foreign ownership is currently at 5 percent.
"The stock trades at a deep discount to its peers due to the low foreign ownership limit. We have a Buy recommendation on the stock with a target price of 12 dirhams per share," he said.
The Saudi index gained 1.5 percent to 7,679 points on the back of strong global bourses and Friday's 3 percent rebound of oil prices, as investors continued to anticipate a positive decision by index compiler FTSE at the end of this month on whether to upgrade Riyadh to emerging market status, and a similar decision by MSCI in June.
The index confirmed a break above resistance on the late February peaks, triggering a minor double bottom formed by the lows since February. The pattern points back up to at least the January peak of 7,702 points.
Petrochemical stocks were particularly strong with all companies in the sector gaining. National Petrochemical jumped 9.9 percent after proposing a 0.5 riyal per share annual dividend, in line with the previous year's, and Saudi Industrial Investment Group gained by the same margin after reporting annual profit increased more than ten-fold.
In Abu Dhabi, Dana Gas climbed 4.0 percent after saying it would hold a board meeting on Wednesday. There has been speculation that it could reach an agreement with holders of its $700 million of sukuk on restructuring the instruments, although the nature of any deal remains unknown.
Qatar's index edged down 0.3 percent as Doha Bank lost 4.2 percent, falling sharply for a second straight day after going ex-dividend. (Reporting by Andrew Torchia Editing by Mark Potter)