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Opec's decision spooks Middle Eastern markets

[DUBAI] Dubai stocks headed for a three-week low, leading declines in most Middle Eastern markets, after Opec decided to forgo an output reduction that might have propped up oil prices and eased the pressure on the region's export revenues. Abu Dhabi equities dropped the most in a week.

Shares in the Middle East are catching up with Friday's losses across emerging markets after the Organization of the Petroleum Exporting Countries kept production at about 31.5 million barrels a day, amid a glut in global oil supply.

"The market is going to continue to see some selling pressure this week" as Opec's decision will continue to dampen sentiment, said Saleem Khokhar, who manages about US$2.5 billion as head of equities at the asset management group of National Bank of Abu Dhabi PJSC, the UAE's biggest bank. "The banking sector has been pretty aggressively sold, so we do see some real value there, although take on board it's going to be a soft economy next year." The DFM General Index retreated 0.9 per cent to 3,174.34 at the close of trading. Dubai Islamic Bank, which holds the second-largest weighting on the gauge, declined the most since August. The ADX General Index fell 0.9 per cent. National Bank has fallen 37 per cent this year, more than five times the drop in Abu Dhabi's gauge.

Brent crude, a pricing benchmark for half the world's oil, dropped near a six-year low on Friday as the new output implied that the earliest Opec can consider reducing production is June. The UAE, home to about 6 per cent of the world's proven oil reserves, relies on income from crude to help fund government spending.

Saudi Arabia's Tadawul All Share Index slipped 0.3 per cent, led by Jabal Omar Development Co, which builds accommodations for pilgrims to Mecca. Kingdom Holding Co, owned by billionaire Prince Alwaleed bin Talal Al Saud, headed for an August high after a French fund and several unnamed companies bought a US$150 million stake.

Stocks in Kuwait rose 0.1 per cent, while Qatar's QE Index added 0.2 per cent. Oman's gauge fell 0.3 per cent. Iranian stocks retreated 0.3 per cent, according to data on the Tehran Stock Exchange website.

Bahrain stocks were little changed while Egypt's EGX 30 Index slid 0.7 percent, as investors sold their holdings after the gauge's best week since May, according to Sherif Shebl, an equity trader at the foreign sales desk at Pharos Holding.

BLOOMBERG