STOCKS NEWS MIDEAST-Qatar rebounds; govt appears conciliatory to Gulf allies

Reuters Middle East

0659 GMT - Qatar's bourse recovers sharply from Wednesday's slump after the Qatari government appears conciliatory in its diplomatic dispute with Saudi Arabia, the United Arab Emirates and Bahrain.

Those three countries decided to withdraw their ambassadors from Doha on Wednesday, saying Qatar had failed to honour an agreement not to interfere in their internal affairs. Qatar's stock market dropped 2.1 percent in response.

But Doha then said it would not pull out its envoys from the three countries and that it remained committed to regional security and stability - raising hopes that tensions would ease. Doha's benchmark rises 2.0 percent.

"It's too early to tell what the medium to long-term impact will be, but today is a reversal of the knee-jerk reaction to yesterday's news," says Amer Khan, senior executive officer at Shuaa Asset Management.

"Historically, disagreements like these did not get publicised and this was a departure from that."

Dubai's measure also rebounds, rising 1.0 percent after slipping 0.5 percent in the previous session.

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0606 GMT - Abu Dhabi heavyweight First Gulf Bank tumbles after passing the date on which investors qualify for dividends.

Shares in the lender drop 4.8 percent to 16.70 dirhams. FGB proposed a 2013 cash dividend of 0.769 dirhams.

Meanwhile, Dana Gas sheds 2.3 percent after its board proposed to pay no dividend for 2013.

Abu Dhabi's benchmark retreats 1.3 percent to 4,876 points.

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0535 GMT - Gulf stock markets look likely to steady on Thursday after Qatar said it would not pull out its envoys from Saudi Arabia, the United Arab Emirates and Bahrain, and that it remained committed to GCC security and stability following a diplomatic row over its policies towards Islamists.

Saudi Arabia, the UAE and Bahrain decided to withdraw their ambassadors from Doha on Wednesday, saying Qatar had failed to honour a Gulf Cooperation Council agreement not to back "anyone threatening the security and stability of the GCC whether as groups or individuals - via direct security work or through political influence, and not to support hostile media".

Qatar's bourse dropped 2.1 percent on Wednesday in its biggest one-day loss in over six months, while other Gulf stock markets came well off their highs.

Any diplomatic chill in the GCC could be potentially costly for Qatar; analysts estimate non-Qatari GCC nationals may own 5 to 10 percent of Qatar's stock market, which has a capitalisation of about $175 billion.

But Qatar's conciliatory response to the other countries suggested the dispute may be patched up. Much of Wednesday's selling of stocks was driven by retail investors, who will probably be quick to return as buyers on any signs of tensions easing.

Meanwhile Egypt's market, buoyed by optimism over upcoming elections and the clearest signal yet from the army chief that he will run for the presidency, may be lifted further after the financial regulator removed a ban on brokerage firms and fund managers trading shares listed overseas.

The move will not directly help the Egyptian market but suggests the regulator is keen to repair the financial sector and take a more benign approach after the disruption of the last three years.

The global market backdrop is slightly positive; MSCI's emerging market index climbs 0.6 percent as diplomatic efforts moderate the crisis over Ukraine. ($1 = 3.6729 UAE dirhams) (Reporting by Nadia Saleem; Editing by Andrew Torchia)

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