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MIDEAST STOCKS-Markets surge on Greek rescue

By Matt Smith DUBAI, May 10 (Reuters) - Middle East markets rebounded on Monday as global policy makers unleashed a $1 trillion rescue package to stop a Greek debt crisis ravaging the euro currency. United Arab Emirates bourses were also boosted by a top official saying Dubai World's debt restructuring was going well. Qatar's index climbed 3.7 percent in its largest gain for eight weeks and Saudi Arabia rose for a second day as a Greek bailout soothed panicking investors. "The EU has agreed to help Greece, so we're seeing a recovery locally because there is no danger to Gulf markets," said Thamer Gadallah, head of investments at Almana Group. The Greece rescue package sent world stocks and oil prices soaring, but questions remain about whether Europe's weakest economies will wilt under debts. "If Greece needs this much, how much money might Spain or Portugal need?" said Saleh al-Onazi, a vice-president at Swicorp in Riyadh. "There are long-term questions ... to be answered." Dubai's index climbed 1.6 percent after the country's central bank governor offered an upbeat outlook for indebted Dubai World, adding that no more major corporate restructurings were expected. Sultan Nasser al-Suweidi's remarks came after Financial Times said units of Dubai Holding, a state-controlled group like Dubai World, had hired advisers ahead of a potential plan to restructure billion-dollar debts. This boosted sentiment, said Hesham Bakry of Prime Emirates brokerage, as "the market was worried about the uncertainty over the Dubai World debt situation, whether there will be an agreement and what this agreement will look like". Dubai's Arabtec rose 1.6 percent to 2.50 dirhams after the builder reported a 17 percent drop in first-quarter profit as an analyst offered an upbeat outlook. "With Dubai receivables heading towards a happy ending, contracts coming in fast and fat, the expansion into new territories gaining momentum and the company still trading at a 60 percent discount to global peers - we keep our buy recommendation," Shuaa Capital wrote in a research note, setting a fair value of 4.87 dirhams per share. Saudi Basic Industries Corp (SABIC), seen as a proxy for the world economy, gained 2 percent. Saudi Arabia's index climbed 1.3 percent, taking its gains to 3.8 percent in two days since plunging 4.4 percent on Saturday, its biggest loss for 14 months . It is down 2.4 percent since posting a 19-month high on April 26. "There was panic selling, but Greece's problems wouldn't have an affect on the Saudi economy in the short term, so the market should not have fallen so much," said Swicorp's Onazi. "The Greece issue was a good reason for a healthy correction." Egypt's main index rose 3.2 percent and traders said the Egyptian market would extend its gains if the bailout succeeds in stabilising world markets. "We saw weakness creep in at the end of the market, but if the U.S.

rallies then we will see a 1 percent gain at the open of next session," said Teymour el-Derini of Naeem brokerage. MONDAY'S HIGHLIGHTS EGYPT * The index rose 3.2 percent to 6,975 points. QATAR * The index climbed 3.7 percent to 7,334 points. DUBAI * The index rose 1.6 percent to 1,741 points. ABU DHABI * The benchmark climbed 1.6 percent to 2,795 points. KUWAIT * The measure rose 1.7 percent to 7,093 points. SAUDI ARABIA * The index gained 1.3 percent to 6,761 points. OMAN * The index rose 0.5 percent to 6,759 points. BAHRAIN * The measure climbed 1.2 percent to 1,559 points (Additional reporting by Marwa Awad in Cairo in Cairo; editing by Firouz Sedarat) Keywords: MIDEAST STOCKS MARKETS (matt.smith1@thomsonreuters.com; +971 4 391 8301; Reuters Messaging: matt.smith1.thomsonreuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

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