Gulf markets rebound after US Fed bails out AIG

Dubai: UAE and Gulf stocks rallied on Wednesday mirroring the rebound in some Asian and overnight US shares after the Federal Reserve bailed out insurance giant AIG and central governments around the world pumped in billions to avoid a massive credit crisis.

The US government later sought to raise $40 billion to help Fed finance the rescue plan as the cost of staving off crisis on Wall Street soared.

Oil jumping by $3 a barrel on Wednesday also buoyed investor sentiment in the region. The Dubai Financial Market closed 2.29 per cent up to 4044.99 with value traded expanding 17. 11 per cent to Dh1.30 billion.

Though volumes declined, Abu Dhabi Securities Exchange posted gains for the second consecutive session, closing 1.62 per cent up to 3831.59. The turnover tumbled 44.70 per cent to Dh647.74 billion.

"Over the past week, the markets had taken a lot of beating and it had to bounce back and you cannot rule out the correlation between our markets and the US, at least psychologically," said Amro Diab, head of GCC institutional sales, EFG-Hermes.

"How sustainable is the rebound? It may just be one or two day rebound. The mood around is still very negative. I don't see any flows coming, whether it is coming from local institutions or retail."

In the short-term "it will be very volatile - we will see a lot of extreme moves," said Fadi Al Said, head of equities, ING Investment Management Middle East.

Other GCC markets also ended in positive territory with the Doha Securities Market jumping 8.6 per cent, Saudi Tadawul index increasing 3.3 per cent and Muscat advancing 4.16 per cent. In Asia, Nikkei-225 index was up 1.21 per cent and Seoul finished 2.7 per cent higher. Hong Kong and Shanghai lost 3.6 per cent and 2.9 per cent respectively.