March 14, 2017 / 5:37 AM / 4 months ago

MIDEAST STOCKS-Gulf may consolidate, merger speculation dominate Dubai

2 Min Read

DUBAI, March 14 (Reuters) - Gulf stock markets look set to consolidate on Tuesday in the absence of fresh news, although merger speculation may continue to dominate Dubai.

Regional bourses have dropped this week in response to lower oil prices and anticipation of U.S. interest rate hikes. But Wall Street and oil moved little overnight and with tighter U.S. monetary policy now mostly priced in, Gulf stocks could stabilise.

Saudi Arabia's index, last at 6,788 points, has technical support at the January low of 6,745 points.

In Dubai, activity may continue to focus on Shuaa, which climbed 3.2 percent to a seven-year closing high of 1.93 dirhams on Monday, and GFH, which surged 7 percent.

Speculation that the two companies could merge was fuelled this week by local news provider MEED quoting Shuaa chairman Jassim Alseddiqi as saying Shuaa was in talks with a larger regional financial institution over a potential share-swap merger in a deal that could be worth billions of dirhams.

He gave no details but some fund managers think the growing investment ties between GFH and Shuaa's main shareholder Abu Dhabi Financial Group could be in preparation for a merger. The Dubai exchange has not asked Shuaa to clarify its chairman's statement, however.

In Dubai, Air Arabia and Dubai Insurance go ex-dividend on Tuesday, which could pressure the stocks. United Development goes ex-dividend in Qatar. (Reporting by Andrew Torchia)

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