By Nadia Saleem
DUBAI, Oct 1 (Reuters) - Gulf markets were mixed on Tuesday as investors treaded cautiously due to thin local newsflow and a weak global backdrop due to the U.S. government shutdown, while Egypt'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 up 17.8 percent so far in 2013.
Although investors are waiting for third-quarter earnings to justify increasing exposure to the market, most analysts are expecting muted growth in the major sectors, while attractive buying 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. "The growth story is generally not meaningful."
Some sectors that have enjoyed double-digit growth, like retail, have surged in recent months, making valuations expensive. Retail sector index climbed 3 percent on Tuesday, extending year-to-date gains to 55.2 percent.
Henin said telecom shares in the coming months could take a small hit from fewer pilgrims expected for Hajj during October.
NCB Capital said in a note it expected a 3-5 percent negative impact on profit for telecom operators due to a reduction in the number of visas issued for pilgrims. The government has set stricter visa limits due to construction around the holy sites in Saudi Arabia.
In Egypt, the benchmark index rose 1 percent, up for a first session this week since Thursday's seven-month high.
"Market is dominated by retails that have a strong appetite," said Mohamed Radwan, director of international sales at Pharos Securities. "People are optimistic on the roadmap (a plan to return to civilian rule) and drafting the new constitution on time, which is helping the market."
Heavyweight Commercial International Bank rose 2.3 percent, while small- to mid-caps dominated trading.
Foreigners were net buyers, against regional and Egyptian sellers, bourse data showed.
Elsewhere in the Gulf, the first U.S. government shutdown in 17 years triggered slight profit-taking.
The dollar fell to an eight-month low against the euro, but otherwise left equity markets firmer while U.S. Treasury bonds fell.
Gulf currencies are pegged to the dollar, which weakens their purchasing power. Brent oil slid below $108 a barrel on worries that the U.S. government shutdown will crimp demand in the world's largest consumer.
Dubai's index shed 0.2 percent, trimming 2013 gains to 69.9 percent. Abu Dhabi's measure also clipped 0.2 percent.
Dubai's measure hit a new intraday five-year high before profit-taking dented the day's gains.
"There are interesting catalysts in place for a new leg up for 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 this month, could also fuel more bets on a bullish outlook for the country.
In Kuwait, the index slipped 0.5 percent to its lowest close since Sept. 17. Qatar's bourse gained 0.2 percent - trading within a 100 points range since Thursday's two-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.