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Gulf markets sink as oil price reaches $57 per barrel

Gulf markets sink as oil price reaches $57 per barrel

DUBAI: Gulf stock markets fell in early trade on Tuesday as Brent crude oil slumped near a five-year low and political uncertainty in Greece put pressure on global equities.

Brent approached $57.0 per barrel as persistent worries about a global supply glut offset concerns about output disruptions in Libya.

Dubai’s index dropped 3.9 percent as most stocks declined. Builder Arabtec Holding and developer Emaar Properties, the most heavily traded stocks, tumbled 5.3 percent each.

Although Dubai is much less dependent on oil revenues than other Gulf states, its stock market has been hit hardest in the region in recent months because of its higher liquidity, exposure to foreign investors and the unwinding of leveraged positions.

Elsewhere in the Gulf, Abu Dhabi’s index edged down 0.5 percent, Kuwait and Oman lost 1.0 percent each and Qatar’s bourse dropped 2.0 percent.

The Saudi Arabian government announced last week that it would continue spending heavily in its 2015 budget plan, easing investors’ fears that cheap oil would lead to major state spending cuts in the Gulf. As long as state spending continues, economies and corporate profits in the big Gulf economies are expected to keep growing healthily.

However, Gulf bourses’ pull-back on Tuesday showed weak oil prices can still hurt sentiment among the local retail investors who dominate trading volumes.

Global equity markets were soft on Tuesday as investors avoided risk after a sharp sell-off in commodities, and also because of political uncertainty in Greece where Prime Minister Antonis Samaras failed to get enough support for his presidential nominee on Monday, and will call a national election for Jan. 25.