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Saudi Arabia climbs, falling rig demand hurts Qatar

Both Brent crude and U.S. oil gained about $1 per barrel as news of a slowdown in U.S. drilling continued to buoy prices.

(Reuters) – Gulf stock markets were mixed on Monday as stronger oil supported Saudi Arabia but news of falling demand for drilling rigs dragged down Qatar.

Both Brent crude and U.S. oil gained about $1 per barrel as news of a slowdown in U.S. drilling continued to buoy prices.

This helped the Saudi stock benchmark climb 0.9 percent as most stocks rose, offsetting negative influence from heavyweight Saudi Basic Industries, which dropped 2.9 percent as it went ex-dividend.

Petrochemical firm PetroRabigh jumped 2.6 percent after announcing it would ask shareholders to approve raising its capital via a rights issue worth about 7.04 billion riyals ($1.88 billion).

The company has yet to decide the offer price and number of new shares, but such issues in Saudi Arabia are usually offered to existing shareholders at a major discount to the market price. Rights can be sold separately, allowing investors to profit without committing extra cash.

Banks were also strong. Samba Financial Group jumped 3.1 percent ahead of its earnings announcement. After the market closed, the lender posted a 3.1 percent increase in first-quarter profit, beating the estimates of analysts who had expected a slight decline.

Tabuk Agricultural Development and Qassim Agricultural Co surged 2.3 and 4.0 percent respectively after another firm in the sector, Jouf Agricultural Co, posted a 66.1 percent increase in first-quarter profit on stronger sales and lower costs. Jouf itself climbed 2.1 percent.

QATAR, UAE

By boosting oil prices, the falling global rig count was positive for the Saudi market, which is dominated by petrochemicals. But Qatar’s market dropped after one of its own drilling rig providers, Gulf International Services (GIS) , said it was suffering from cheap oil.

Qatar’s index lost 1.4 percent as GIS tumbled its daily 10 percent limit to 86.20 riyals, a two-week low. The company posted an 89 percent increase in first-quarter profit on Monday but said a customer of its subsidiary Gulf Drilling International (GDI) would release a contracted rig in May because of oil’s decline.

It also said another customer had requested lower day rates, and warned investors that these reductions would hurt GDI’s 2015 financial results. GDI was the main breadwinner for GIS last year, accounting for 46 percent of its total revenue.

Most other stocks in Doha also fell, but shipping firm Qatar Navigation bucked the trend. It inched up 0.1 percent after announcing talks with United Arab Emirates-based United Arab Chemical Carriers on a possible combination of their product and chemical tanker businesses.

Qatar Navigation, also known as Milaha, said that if successful, the move would create a larger business, provide better financial returns, and strengthen its combined business market position. It provided no details.

Elsewhere in the Gulf, Dubai’s index dropped 0.8 percent, moving back below its 100-day average, now at 3,789 points, after closing above the average on Sunday for the first time since October.

Dubai-listed shares in Bahrain’s Gulf Finance House tumbled 7.7 percent after the company said it would study the continuation of its equity listings in London and Kuwait. The firm also said its shareholders had approved reducing its capital to $598 million from $1.49 billion to eliminate accumulated losses.

The company’s Kuwait-listed stock dropped 2.6 percent, contributing to the weakness of the Kuwaiti index , which slipped 0.2 percent.

Abu Dhabi’s market edged up 0.6 percent on the back of blue chip banks; Abu Dhabi Commercial Bank, National Bank of Abu Dhabi and First Gulf Bank rose 3.6, 2.2 and 1.0 percent respectively.