Abu Dhabi: Turmoil in Libya and growing civilian unrest in the Middle East and North Africa (Mena) region will likely keep the region's stock markets under selling pressure in the week ahead, but surging international crude oil prices may limit the downward pressure, market experts say.

"The situation in Libya is very critical. The region's stock markets will continue to be under selling pressure and experience high volatility.

"There may be sideways movement within the range we saw last week," Mohammad Ali Yasin, Chief Investment Officer at CAPM Investment told Gulf News by telephone.

"Whilst global markets have enjoyed a strong positive run, the Mena equity markets remain mired in the geopolitical problems of the region. We believe that the downside risk comes from ongoing international selling of local equity markets," said Gary Dugan, Chief Investment Officer — Private Banking at Emirates NBD in a research note.

Only hope

He added: "Unfortunately, the poor performance is unlikely to end until a political resolution can be found and that may be some months away.

"The only hope is that Egypt or Tunisia can provide a model for how the political issues can be resolved.

"A politically stable Mena region would be able to take substantial advantage of the high prevailing oil prices to boost growth and provide a vibrant backdrop to a much stronger performance from the local financial markets."

US stocks fell last week, driving the Standard & Poor's 500 Index to the biggest drop in three months, after surging oil amid speculation Libya is heading for civil war spurred concern that economic growth will slow.

The S&P 500 declined 1.7 per cent to 1,319.88, the first drop after three straight weeks of gains. The index retreated 2.1 per cent on February 22, its biggest one-day drop since August 11.

The Dow Jones Industrial Average dropped 260.80 points, or 2.1 per cent, to 12,130.45.

Last week, European stocks posted their biggest weekly retreat in seven months, led by declines in airlines and automakers, as Libya's violent uprising boosted tension in the Mena region and sent global oil prices soaring to two-and-a-half-year highs.

Last week Asian stocks fell too, amid concern instability in the Mena region may derail a global economic rebound.