Gulf stocks at mercy of falling oil price in Qatar-led retreat

Qatari stocks led losses in most equity markets across the six-nation Gulf Cooperation Council after Brent crude slumped to the lowest level since January. The QE Index, the benchmark share gauge for the world's biggest exporter of liquefied natural gas, retreated 1.4 percent to 11,610.22, its weakest close since April 1. Dubai's DFM General Index's slipped 0.6 percent, while Saudi Arabia's Tadawul All Share Index gained 0.2 percent at 1:40 p.m. in Riyadh after sliding as much as 1.1 percent.

Plunging oil prices are putting pressure on economies in the GCC, which rely on income from energy revenue to fund their state budgets. Brent capped a sixth weekly loss on Friday amid speculation that the return of drilling rigs in the U.S. and Iranian shipments will prolong a global glut. The GCC is home to almost a third of the world's proven crude reserves.

"The fall in oil is draining confidence out of the markets," said Wadah Al Taha, the Dubai-based chief investment officer of Al Zarooni Group, who favors banking stocks in the region over energy companies until oil prices find a bottom. "With oil staying below the $50 barrel level all of last week, there are doubts about a recovery in demand soon," he said.

Brent, the benchmark grade for more than half of the world's oil, dropped 1.8 percent on Friday to $48.61 a barrel, the lowest since Jan. 28. Prices have fallen more than 50 percent in the past 12 months. Natural gas for September delivery declined 0.5 percent to settle at $2.798 per million British thermal units on the New York Mercantile Exchange.

Iran is seeking to regain oil-market share by boosting supply after last month's nuclear agreement with world powers. Production can increase by 500,000 barrels a day within a week after sanctions end, and by 1 million barrels a day within a month, the state-run Islamic Republic News Agency cited Oil Minister Bijan Namdar Zanganeh as saying in an interview last week with state TV.

Emaar Properties PJSC, Dubai's biggest developer, was the top contributor to losses in the emirate's stock index. Abu Dhabi's ADX General Index fell 0.6 percent even as Dana Gas PJSC, the Sharjahbased energy explorer, rose 7 percent in more than four times the three-month average daily volume.

Saudi Arabia's Al Rajhi Bank, the lender with the biggest weighting on the Tadawul, led the recovery with a 0.5 percent increase. The 14-day relative strength index of the Saudi gauge was at 24 at the end of last week, the lowest level since December. A level below 30 indicate to some analysts the equities have dropped too fast and are poised to recover.

"The Saudi market has been very weak for the past few sessions due to oil's slump and some investors are trying to build positions in anticipation of a shortterm bounce back," Sebastien Henin, the head of asset management at The National Investor in Abu Dhabi, said by phone. Henin, who oversees $90 million in assets, is underweight on Saudi equities until there are signs of oil-price recovery and the regional conflicts in which Saudi Arabia is involved are resolved.

Kuwait's gauge also erased losses to close 0.4 percent higher. Bahrain's measure was little changed, while Oman's MSM30 Index decreased 0.4 percent.

The EGX30 Index in Egypt slid 1.1 percent, headed for the lowest close in almost two weeks. The measure gained 1.3 percent last week. Talaat Moustafa Group was the biggest decliner, with a 3.9 percent retreat, the sharpest drop since July. "The market reacted prior to the inauguration of the new Suez Canal project and not after that," Mohamed Radwan, the head of equities at Pharos Holding, said by phone from Cairo. "It's a matter of liquidity and appetite rather than micro news."

Egypt, the most populous Arab country, unveiled an $8.5 billion expansion to the Suez Canal on Thursday, the first of a series of projects the government has promised to undertake to transform the country after years of turmoil.

Israel's TA-25 Index slipped 0.3 percent. Opko Health Inc. led the declines, with a 9.2 percent drop, the sharpest retreat December 2013.