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DUBAI, Dec 20 (Reuters) - Banking shares in Qatar may attract interest on Tuesday after three Qatari banks said they were in talks for a potential $44 billion merger, but performance in other markets in the Gulf could be sluggish because of a lack of positive catalysts.
Masraf Al Rayan, Barwa Bank and privately listed International Bank of Qatar have begun initial talks on a potential merger, the banks said late on Monday in a deal that would create the Gulf state's second-largest bank.
Shares in Masraf Al Rayan, the second-largest bank in Qatar by market capitalisation, may be bid up in heavy volume since it is the largest Qatari constituent in the MSCI Emerging Markets index.
Telecommunications operator Ooredoo may also attract interest after the company said it was in preliminary negotiations with Salam International about the potential acquisition of a majority stake in its IT subsidiary.
But in Saudi Arabia, activity may be limited as investors await the 2017 state budget, which is expected as soon as on Thursday. Some traders have already moved funds into stocks expected to benefit from the announcement.
On Monday builder Abdullah Al Khodari, which has many projects with the government, surged 9.3 percent as the company may benefit from increased work in the coming year if the budget includes an increase in construction expenditure, as many analysts expect.
Global stocks moved little overnight and oil prices retreated slightly; MSCI's broadest index of Asia-Pacific shares outside Japan pared earlier gains to trade little changed and Brent oil has slipped 0.2 percent to $54.82.
So Dubai's main index looks set to stay below technical resistance on the August peak of 3,624 points, which it tested and failed to break decisively last week. (Reporting by Celine Aswad; Editing by Andrew Torchia)