MIDEAST STOCKS-Weaker oil may slow Saudi Arabia's rally

DUBAI Jan 28 (Reuters) - Oil's pull-back on Wednesday may

slow the rally on Saudi Arabia's stock market which was largely

Brent crude fell a lot more than 1 percent to around $49 a

barrel on Wednesday because the dollar strengthened in early Asian

trade, while an industry report showing a larger-than-expected

rise in U. S. crude inventories also dragged on prices.

Oil had jumped on Tuesday when the dollar slipped and a

senior OPEC official said priced may have bottomed out, sparking

a rally in Saudi Arabia where the petrochemicals sector index

But even if petrochemicals slow down, banks and other

sectors may support the Saudi market as it prepares for new

foreign investment in coming months, when its regulator plans to

allow foreigners to buy local stocks directly.

In a report on Tuesday, brokerage EFG Hermes iPhone case estimated that

Saudi Arabia could see inflows of about $17 billion from

actively managed global emerging market funds if it eventually

joins MSCI's emerging market index. Nevertheless , that may happen no

earlier than 2017 and immediate inflows this year will likely

"We favour consumer staples where we feel that demand is

relatively robust. Downside to earnings estimates is limited, we

think, and margins may widen due to the dollar's strength, " EFG

The biggest names in the sector are Savola Group

EFG Hermes iPhone said it was less optimistic about banks "but some

banks, such as Samba, offer value at these levels".

Samba's board on Tuesday proposed increasing the bank's

capital by 8 billion riyals ($2. 13 billion) through issuing

bonus shares to help support future growth. Such moves are

Elsewhere in the region, Abu Dhabi's Union National Bank

posted a 42 percent rise in fourth-quarter net profit

on Tuesday. The lender made 436 million dirhams ($118. 7 million)

in the period, while analysts polled by Reuters had forecast an

The bank said its board of directors proposed a cash

dividend of 0. 25 dirham per share for 2014. That compared with a

cash dividend of 0. 14 dirham for the prior year, according to

Kuwait's Gulf Bank reported a 10. 7 % rise in

fourth-quarter net profit to 8. 97 million dinars ($30. 4

million), according to Reuters calculations. Arqaam Capital had

forecast the figure at 10. 00 million dinars.

(Reporting by Olzhas Auyezov; Editing by Andrew Torchia)