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Page last updated at 17:00 GMT, Tuesday, 7 October 2008 18:00 UK

Middle East stock markets plunge

Kuwaiti investor
MPs had tried to get Kuwait's exchange closed to save investments

Shares on the main Arab stock markets have fallen sharply amid concern the financial crisis in the US and Europe is spreading to the Middle East.

Egypt's main index dropped by more than 16%, while shares in Saudi Arabia lost about 8% cent of their value.

Both markets have dropped by more than 40% since the beginning of 2008.

Analysts spoke of panic in markets, with investors concerned about the future for banks, and companies exposed to a faltering property market.

While billions of dollars were wiped off share values in the Arab world, the Israeli stock exchange rose sharply after the central bank cut interest rates.

The Saudi stock market, the Arab world's largest, has now lost more than 40% of its value this year.

The Cairo and Alexandria Stock Exchange (CASE) temporarily halted trading after shares of several major companies plummeted below a threshold of 10%, the official Mena news Agency reported.

"It is a catastrophe. It is clear that we will remain volatile and unpredictable as long as global markets remain impacted by the financial turmoil," said Saudi economist Abdulwahab Abu-Dahesh in remarks quoted by AFP news agency.

Downward pressure

Reports say Gulf stock markets have shed about $150bn of their capitalisation in the past three days, standing at about $800bn at the end of trading on Tuesday.

Saudi Arabia's benchmark Tadawul All Shares Index continued to trade at a four-year low, dropping 472 points to 6253, after its 732-point fall on Monday.

Dubai's DFM Index fell by more than 5% to close at 3,369 points.

The Kuwait Stock Exchange closed down more than 2.5% after losing 3.5% on Monday.

Saudi analysts said the downward pressure was driven by a combination of general nervousness and a drop in profits reported by some banks affected by the global sub-prime mortgage crisis.

The Kuwaiti government reportedly rejected calls by lawmakers to intervene in the market to prevent more losses.

The market has fallen nearly 10% since the end of the Eid holiday last week, despite the government supporting local banks with liquidity problems through an injection of tens of millions of dollars.

Meanwhile Israel's TA-25 index rose by nearly 4% after the Bank of Israel announced a 0.5-point cut in its base rate to 3.75%. Its tech stock index performed even better with a rise of 6.75%.





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