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Falling oil may depress Gulf sentiment

Gulf equity markets under pressure after oil prices fell further under the weight of the weakening Chinese yuan

DUBAI, Aug 12 (Reuters) – Gulf equity markets may remain under pressure on Wednesday after oil prices fell further under the weight of the weakening Chinese yuan.

Benchmark Brent futures were down 32 cents at $48.86 per barrel at 0446 GMT. U.S. crude was trading at $42.90 per barrel, down 18 cents from Tuesday when it marked it lowest settlement since March 2009.

China’s yuan hit a four-year low, slipping further a day after authorities devalued it in a move to support the struggling economy, which sparked fears of a global currency war.

Also pressured by China, Asian stocks and emerging market currencies have tumbled on Wednesday. MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 2.3 percent to two-year lows.

In the Gulf, Dubai construction and engineering firm Drake and Scull may fall after it reported a 60 percent drop in second-quarter profit attributable to shareholders.

The company said sentiment in the sector was bearish and its margins had come under pressure because of delays on several projects. Drake and Scull’s results may make the market less optimistic about its competitor Arabtec whose board will review second-quarter earnings on Aug.15.

But another Dubai firm, Islamic insurer Takaful Emarat , may attract buyers after its quarterly profit quadrupled.