MIDEAST STOCKS-Dubai hits 10-wk high ahead of Dubai World offer

By Matt Smith DUBAI, March 21 (Reuters) - Dubai's bourse hit a 10-week on closing high on Sunday as investors bet on a Dubai World restructuring offer favourable to creditors, while other Middle East markets were flat. The Saudi market recouped initial losses to edge up to a new 17-month high and is tipped to lead a rally in regional markets. Abu Dhabi and Oman rose, but Qatar and Kuwait fell, with the latter weighed by a 5.1 percent decline in Agility. Dubai's index climbed 2.8 percent to its highest finish since Jan. 11.

Dubai Financial Market jumped 6.3 percent and Emaar Properties added 4.9 percent. "People are still expecting something positive to come out of Dubai World," said Chamel Fahmy, Beltone Financial regional senior sales trader. Dubai World is restructuring about $26 billion in debts, with Dubai's index down 15.2 percent since the conglomerate made a shock standstill request in November. "I don't think an announcement will trigger a profit-taking wave, because valuations are the most attractive in the region," said Haissam Arabi, chief executive and fund manager at Gulfmena Alternative Investments. "It all depends on what the restructuring entails - if Dubai World offers a seven-year roll-over and full repayment, then this is already discounted in the market, but if there's a government guarantee the market will fly." Kuwait's index fell for a fourth day as Agility slumped to a six-week low after a newspaper said the logistics firm laid off about 500 staff, with more job losses likely. Agility is down 48 percent since a U.S. court indicted it on fraud charges in November. Zain climbed 1.5 percent, equalling last week's five-month high as the possible completion of its $9 billion African asset sale nears, with the board of buyer Bharti Airtel approving its offer on Saturday. National Investments Co (NIC) climbed 1.2 percent. The Kharafi group is a major shareholder in Zain, NIC and a host of other Kuwait stocks. "Zain is up massively, so we didn't expect a significant appreciation from this latest news," said Naser al-Nafisi, general manager for Al Joman Center for Economic Consultancy in Kuwait. "We expect there will be significant profit-taking in Zain and other Kharafi companies once the deal is finalised." This could see Kharafi-affiliated stocks fall about 10 percent, Nafisi said, while the index could lose 5 percent. "I think the market will be sideways to slightly lower until the end of March as we wait for an official Zain announcement," Nafisi added. The Saudi index rose 0.3 percent to its highest finish since Oct. 6, 2008 and Arabi offered a bullish outlook for regional equities, with the kingdom's index to outperform. "Saudi Arabia will be the main proxy for the whole MENA region asset class because of its strong fundamentals, firm oil prices and budgetary spending," he said. "Regional markets are decoupling from the rest of the world and year-to-date we're one of the best performing asset classes in the world." Barwa Real Estate climbed 1.6 percent after receiving regulatory approval for its takeover of Qatar Real Estate (Alaqaria). The latter rose 1.5 percent. SUNDAY'S HIGHLIGHTS DUBAI * The index rose 2.8 percent to 1,774 points. SAUDI ARABIA * The benchmark climbed 0.3 percent to 6,722 points. EGYPT * The index fell 0.9 percent to 6,554 points. ABU DHABI * The benchmark climbed 0.9 percent to 2,857 points. KUWAIT * The measure fell 0.08 percent to 7,408 points. QATAR * The index eased 0.1 percent to 7,310 points. OMAN * The benchmark rose 0.7 percent to 6,678 points. BAHRAIN * The index climbed up 0.4 percent to 1,537 points. (Editing by Firouz Sedarat) Keywords: MIDEAST STOCKS MARKETS (matt.smith@thomsonreuters.com; +971 4 391 8301; Reuters Messaging: matt.smith.thomsonreuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

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