RIYADH, 26 December 2007 — The rally that was witnessed when trading in the Gulf stock markets resumed on Monday after the Eid holidays appeared to be short-lived, as Saudi and Omani shares ended lower yesterday after investors booked profit, with banks leading declines in both markets.

However, UAE markets surged for the third consecutive day, driven by gains in real estate stocks. Kuwait and Qatar gained slightly and Bahrain closed higher.

The Saudi Tadawul All Share Index closed down 1.81 percent at 11,396.28 points, ending a three-day rally.

“The market was overvalued in the past period and that is why we are seeing profit-taking,” said Abdullah Al-Rashoud, chief executive officer of Riyadh-based KSB Capital Group.

“I think the market will trade within the levels we are seeing now until the end of the first quarter of 2008.” Al-Rajhi Bank and Samba Financial Group led, dropping 2.67 percent and 2.21 percent respectively. Al-Rajhi has risen more than 35 percent this month and Samba more than 27 percent.

Oman benchmark index ended down 1.19 percent at 8,984.66 points, its second consecutive daily loss.

“Shares are falling because foreign institutions are on vacation and local investors are taking profits before the end of the year,” said Adel Nasr, a broker at United Securities in Muscat.

“I expect this trend to continue for the next two to three days, and the market will drop maximum 1 percent before rebounding again by the last day of the month.” Bank Muscat and Oman International Bank paced, dropping 2.21 percent and 3.87 percent respectively.

Dubai main index ended up 2.23 percent to 5,992.21 points, its third consecutive gain.

“Local and Gulf Arab speculators are trying to push the index to the 6,000 level and this is why they are focusing on big caps,” said Mohammed Yasin, managing director at Shuaa Securities.

“The market is moving on technicals and not fundamentals and this is affecting all the shares.” Emaar Properties led, gaining 3.14 percent.

Abu Dhabi’s benchmark index closed up 0.7 percent at 4,632.06 points, its third consecutive gain.

Aldar Properties and Dana Gas paced,, ending up 3.57 percent and 5.12 percent, respectively.

Qatar index closed up 0.05 percent at 9,643.23 points, its second higher close in eight trading days.

Qatar Real Estate and Gulf Warehousing Co led, rising 5.15 percent and 7.31 percent, respectively.

Kuwait main index ended up 0.02 percent at 12,392.90 points, its fifth successive day of gains.

Bahrain index ended up 0.15 percent at 2,685.90 points, its third consecutive daily gain.

Bahrain Telecommunications Co and Gulf Finance House led, rising 1.02 percent and 3.79 percent, respectively.