* Egypt leads Middle East higher
* El Sewedy surges on wind power project
* Gulf underperforms as more austerity looms
* Potential merger partners GFH, Shuaa rise in Dubai
* Qatar Navigation tumbles as it goes ex-dividend
By Andrew Torchia
DUBAI, March 16 Middle Eastern stock markets
rose on Thursday, led by Egypt, after the U.S. Federal Reserve
hiked interest rates as expected but signalled no acceleration
in the pace of monetary tightening.
But Gulf bourses lagged emerging markets in general because
of concern that low oil prices and government austerity measures
will continue to weigh on corporate earnings. Among planned
austerity, the six-nation Gulf Cooperation Council plans to
introduce a 5 percent value-added tax in 2018.
The Saudi stock index rose 1.3 percent, while Dubai
was up 1.2 percent and Qatar added 0.7 percent.
MSCI's emerging market index surged 2.0 percent.
Saudi banks outperformed for a second straight day, after
Moody's raised its outlook for the Saudi banking sector to
stable from negative on Wednesday. Banque Saudi Fransi
rose 3.2 percent and National Commercial Bank, the
largest lender, added 2.1 percent.
In Dubai, GFH Financial gained 1.5 percent and
Shuaa Capital added 1.1 percent. GFH confirmed earlier
this week that the two firms were in talks to merge and after a
week of silence, Shuaa issued a brief statement on Thursday
saying preliminary discussions were taking place but no
decision had been reached.
Qatar was buoyed by a 1.6 percent rise by Qatar National
Bank, although Qatar Navigation sank 5.1
percent as it went ex-dividend.
Abu Dhabi's index rose 1.1 percent, but was
restrained by Abu Dhabi Commercial Bank, which fell
2.4 percent as it went ex-dividend.
Five central banks in the GCC raised interest rates in line
with the Fed and the sixth, Oman, had already been allowing its
policy rate to drift higher in recent months.
However, market interest rates in the Gulf will not
necessarily rise because a partial rebound in oil prices and
governments' international bond issues have eased pressure on
state spending. This could improve liquidity in the money
markets over coming months.
In Egypt, the index jumped 1.9 percent as El Sewedy
Electric climbed 2.5 percent after signing a
memorandum of understanding with the Egyptian Electricity
Transmission Co to build a wind power plant in collaboration
with Japan's Marubeni.
* The index climbed 1.3 percent to 6,922 points.
* The index rose 1.2 percent to 3,521 points.
* The index gained 1.1 percent to 4,425 points.
* The index added 0.7 percent to 10,361 points.
* The index edged up 0.2 percent to 6,811 points.
* The index jumped 1.9 percent to 12,984 points.
* The index edged up 0.1 percent to 5,668 points.
* The index rose 0.3 percent to 1,375 points.
(Editing by Mark Potter)