MIDEAST STOCKS-Gulf shares mixed as US shutdown sparks caution; Egypt rises


By Nadia Saleem

DUBAI, Oct 1 (Reuters) - Gulf markets were mixed on Tuesdayas investors treaded cautiously due to thin local newsflow and aweak global backdrop due to the U.S. government shutdown, whileEgypt's bourse rose on retail buying.

Saudi Arabia's measure climbed 0.6 percent,extending gains since Sunday's two-week low. The market is up17.8 percent so far in 2013.

Although investors are waiting for third-quarter earnings tojustify increasing exposure to the market, most analysts areexpecting muted growth in the major sectors, while attractivebuying opportunities are few.

"There's nothing new in the petrochemical sector -everything has reached decent valuations," said Sebastien Henin,portfolio manager at Abu Dhabi's The National Investor. "Thegrowth story is generally not meaningful."

Some sectors that have enjoyed double-digit growth, likeretail, have surged in recent months, making valuationsexpensive. Retail sector index climbed 3 percent onTuesday, extending year-to-date gains to 55.2 percent.

Henin said telecom shares in the coming months could take asmall hit from fewer pilgrims expected for Hajj during October.

NCB Capital said in a note it expected a 3-5 percentnegative impact on profit for telecom operators due to areduction in the number of visas issued for pilgrims. Thegovernment has set stricter visa limits due to constructionaround the holy sites in Saudi Arabia.

In Egypt, the benchmark index rose 1 percent, upfor a first session this week since Thursday's seven-month high.

"Market is dominated by retails that have a strongappetite," said Mohamed Radwan, director of international salesat Pharos Securities. "People are optimistic on the roadmap (aplan to return to civilian rule) and drafting the newconstitution on time, which is helping the market."

Heavyweight Commercial International Bank rose 2.3percent, while small- to mid-caps dominated trading.

Foreigners were net buyers, against regional and Egyptiansellers, bourse data showed.

Elsewhere in the Gulf, the first U.S. government shutdown in17 years triggered slight profit-taking.

The dollar fell to an eight-month low against the euro, butotherwise left equity markets firmer while U.S. Treasury bondsfell.

Gulf currencies are pegged to the dollar, which weakenstheir purchasing power. Brent oil slid below $108 a barrel onworries that the U.S. government shutdown will crimp demand inthe world's largest consumer.

Dubai's index shed 0.2 percent, trimming 2013 gainsto 69.9 percent. Abu Dhabi's measure also clipped 0.2percent.

Dubai's measure hit a new intraday five-year high beforeprofit-taking dented the day's gains.

"There are interesting catalysts in place for a new leg upfor the rally," TNI's Henin said.

Cityscape, a real estate trade fair taking place next week,could boost related shares if new projects are announced.Third-quarter earnings, which will be published later thismonth, could also fuel more bets on a bullish outlook for thecountry.

In Kuwait, the index slipped 0.5 percent to itslowest close since Sept. 17. Qatar's bourse gained 0.2percent - trading within a 100 points range since Thursday'stwo-week low.



* The index climbed 0.6 percent to 8,009 points.


* The index rose 1 percent to 5,678 points.


* The index slipped 0.2 percent to 2,756 points.


* The index declined 0.2 percent to 3,837 points.


* The index gained 0.2 percent to 9,628 points.


* The index declined 0.5 percent to 7,726 points.


* The index eased 0.09 percent to 6,641 points.


* The index slipped 0.4 percent to 1,194 points.

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