UPDATE 1-Borse Dubai says Gulf can withstand global slowdown

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By Alaa Shahine

CAIRO, Feb 25 (Reuters) - Gulf stock markets are likely to withstand a global economic slowdown because of strong fundamentals backed by high oil prices, the chairman of Borse Dubai said on Monday.

"The economic fundamentals of the Gulf area are still very, very strong, given the price of oil is still at a very high level," Essa Kazim told reporters at the Sixth Developing Markets Forum in Cairo. Oil rallied to a record high around $101 a barrel CLc1 last week.

A credit crisis that spread from the U.S. subprime mortgage market to the banking sector has raised the risks of a slowdown in major economies that could hit also emerging markets as investors dump risky assets.

But while Gulf stock markets tumbled late in January along with other emerging assets, the region is supported by its vast oil wealth, the likelihood of currency appreciation in the medium term and attempts to diversify their economies.

"Even if (the economy) has a bit of a slowdown, this is not going to impact the flow of liquidity and the wave of wealth creation that is coming through," Kazim said.

Most Gulf markets have risen in 2008, led by the Omani stock exchange .MSI, which surged about 13 percent. The Kuwaiti bourse climbed almost 11 percent, followed by Abu Dhabi .ADI which rose around 6 percent.

The worse performer so far has been Saudi Arabia .SASI, the world's largest oil producer, whose stock market lost 9 percent of its value, while Dubai .DFMGI indexes are almost steady.