Summer vacations and the approaching holy month of Ramadan, tentatively set to start on August 1, put downward pressure on prices, they added.

”I believe the behavior of regional markets reflects caution on the part of investors who try to remain on the sidelines at this juncture, pending fresh clues to decide their next positions,” an Amman-based portfolio manager told Arab News.

”I think Arab stock markets, particularly in the Gulf region, will keep a close eye in the coming weeks on the European debt crisis, particularly Greece’s rescue deal and what happens in the US, especially the deficit-cutting battle,” he said.

Saudi shares were volatile last week despite better-than-expected second quarter earnings by blue chips, particularly by the petrochemical conglomerate, the Saudi Arabian Basic Industries Corp. (SABIC).

SABIC this week announced a 61 percent rise in half-year profits, to $2.16 billion.

The Tadawul All Share Index (TASI) of the Arab world’s largest stock exchange shed 0.3 percent on weekly basis, closing at 6,489.50 points.

Saudi analyst Mohammad Anqari expected the benchmark to move between 6,400 and 6,600 points in the coming weeks as investors digest the second quarter results.

”I think investors prefer to stay in this risk-free area pending fresh news,” he said.

Anqari attributed the market’s decline despite good earnings mainly to ”liquidity shortage and caution” by traders.

”I believe the Saudi market is watching global news, particularly what happens in the US concerning the debate between the Democrats and Republicans on raising the debt ceiling,” he said.

He expected global developments to affect the Saudi petrochemical and banking sectors ”which have over-lapping” with the world’s major economies.

Anqari also expected China’s monetary tightening to affect demand on Saudi petrochemical products, given the big volume of Saudi petrochemical exports to China.

Kuwaiti shares plunged last week due to external and internal factors, analysts said.

Kuwait’s KSE all-share index fell 1.47 percent on weekly basis, to close at 6,078 points after hitting a seven-year low earlier in the week.

According to Kuwaiti analyst Maitham Al-Shakhs, the Kuwaiti bourse came under pressure mainly from psychological concerns that the failure to raise the debt ceiling in the US would prompt lowering the rating of US banks by rating agencies.

The benchmarks of the UAE stock exchanges of Dubai and Abu Dhabi also closed 1.58 percent and 1.17 percent in the red last week, to close respectively at 1,523 points and 2,693 points.

Qatar’s all-share index shed 1.07 percent, closing week at 8,393 points, while Bahrain’s benchmark closed 1.24 percent in the red, at 1,303 points.

The all-share index of the Amman Stock Exchange (ASE) closed week flat at 2,090 points.

Egypt’s AGX 30 index, which measures the performance of the market’s 30 most active stocks, gained 0.3 percent on weekly basis, to close at 5,136 points.