JEDDAH/DUBAI: Mobile Telecommunications Co. (Zain) was among the key gainers on Gulf markets yesterday after winning the contract for Iran’s third mobile network license.

Zain’s 2.6 percent rise was its largest for three weeks and many other Gulf blue chips also rallied to lift five of the seven regional indexes higher, clawing back some of Monday’s losses as resurgent oil prices and robust global sentiment spurred local investors to buy. Most Gulf markets have been rising since mid-March and the rally is likely to continue in the short-term, analysts say, but a correction will be likely if global equities retreat.

Bahrain’s index surged 2 percent to claim its largest one-day rise since Oct. 30, but the Qatar and Oman benchmarks fell for a second day. The other Gulf indexes advanced, although Dubai’s was the only other to rise by more than one percent. “Regional stocks are taking their cue from international markets and oil prices,” said Shakeel Sarwar, Sico investment bank head of asset management.

Many investors sat out the early stages of the Gulf rally, convinced it was temporary, but they are now buying in at higher prices, boosting stocks further, analysts say.

Sarwar predicted a correction by the end of June.

“I highly doubt the markets will test the lows of February and March, but with some markets up about 50 percent since then, a correction of between 10 to 20 percent would be reasonable,” he said. “A correction on global markets is likely to be the trigger for a fall locally.” Gulf stocks are lagging other emerging markets and so have more upside potential in the short-term, Sarwar added.

The Saudi index has made the largest gains regionally this year, rising by 25 percent, while the Kuwait, Qatar, Oman and Bahrain benchmarks are all in the red. Dubai’s measure is up 2 percent after plunging 72 percent in 2008, among the biggest drops worldwide.

The Tadawul All-Share Index (TASI) rose 1.17 percent to 6,017.66 points, its sixth advance in seven sessions. Only two sectors closed with losses; the Energy sector and Media sector, down 0.37 percent and 1.07 percent respectively. Sector gains ranged from 0.10 percent in Agriculture to 3.44 percent in Cement. Liquidity has come down to SR8.8 billion, supporting yesterday’s positive market breadth; 87 advancers and 31 decliners gave an AD ratio of 2.81, the Jeddah-based Financial Transaction House (FTH) said in its daily stock market commentary.

The market started the day with a loss, hitting the intraday low of 5,904 before rebounding to close back up above the 6,000 level, which has proved to be a key resistance/support.

“Nonetheless, the market was positive, but with a lower liquidity. The market continues to hold above the 5 days exponential moving average (5,944), a level that should be monitored over the coming few days as it will help determine the direction of the market, Faisal Alsayrafi, managing director and CEO of FTH, said.

Dubai’s weakness is likely to continue as the dominant property sector struggles, with few analysts predicting it will recover in the short-to-medium term.

“The sector could still see more project cancellations and cash flow needs to improve,” Julian Bruce, EFG-Hermes director of institutional equity sales. “These problems need to be resolved before real confidence returns to investors.”

The Qatari index fell for a second day, dropping 1.3 percent to 6,419 points. The index in Oman fell 1.7 percent to 5,329 points, taking its losses to 5.1 percent since Sunday’s 17-week closing high.

The Dubai measure climbed 1.2 percent to 1,672 points, while, the Abu Dhabi index was almost unchanged, edging up 0.01 percent to 2,614 points.

The benchmark in Kuwait climbed 0.8 percent to 7,681 points, its ninth rise in 10 sessions.

The Bahraini measure climbed 2 percent to 1,633 points.

­— With input from agencies