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Saudi remains weak despite oil rally, rest of Gulf firm

An overnight rally in oil prices after an OPEC production deal helped lift most Gulf stock markets in early trade on Thursday but Saudi Arabia’s bourse contined to drop.

Saudi petrochemical shares, which make up roughly one-quarter of the market’s capitalisation, jumped after Brent oil surged over $48 a barrel. The largest producer, Saudi Basic Industries, gained 1.9 percent.

But the main Saudi market index resumed its descent and fell 0.5 percent after 40 minutes of trade, heading for a third day of declines. In the previous two days, it slid 7.1 percent.

Tough austerity measures – including cuts to civil service bonuses announced this week – continued to weigh on domestic-demand driven shares. Bookstore operator Jarir Marketing lost 3.0 percent and Aljazira Bank , which provides margin trade accounts to stock market investors, was down by the same margin.

News that the U.S. Congress overwhelmingly rejected President Barack Obama’s veto of legislation allowing relatives of victims of the Sept. 11 attacks to sue Saudi Arabia was negative, but bankers said it would have little impact on the markets because the economic implications for Riyadh, if any, were not yet clear.

Dubai’s stock index climbed 0.9 percent with gainers outnumbering losers 17 to four. Dubai Parks and Resorts , which is due to open its amusement parks next month, added 1.3 percent and Emaar Properties rose 1.9 percent.

In Qatar, the main index was up 0.7 percent with nine-tenths of traded shares advancing. Qatar National Bank was the top gainer, adding 1.3 percent.