They also pointed out that the weak performance of regional stock exchanges preceded a long holiday in the Middle East marking Eid Al-Fitr.

“I believe Arab markets, particularly in the Gulf area, will continue to monitor what measures being taken to give a hand to the US and European economies,” Nizar Taher, chief of brokerage at the Jordan Ahli Bank, told Arab News.

He said the Gulf Cooperation Council (GCC) member states maintained close links with the US and European economies and were expected to suffer from any Western fallout, particularly the repercussions of the downgrading of the US sovereign debt by the Standard and Poor’s (S&P) rating agency.

Taher and other analysts believed that regional markets were keeping an eye on what the US Federal Reserve Chairman Ben Bernanke was going to say during a meeting of central bankers.

Saudi shares led the regional decline last week with the Tadawul All-Share Index (TASI) falling by 1.8 percent on weekly basis, and closing at 5,979.30 points after breaking the 6,000-point psychological level.

The plunge was spearheaded by the petrochemical, transport and construction sectors, analysts said.

Last week’s decline brought the Saudi market’s total loss in August to 6.46 percent, mainly due to the spill-over of the US downgrade.

TASI dropped by 9.69 percent (641.45 points) on a year-to-date basis, according to the Tadawul’s statistical report for August.

The highest closing level for the index during the month was on August 1 at 6,471.82.

Total equity market capitalization at the end of August reached SR1.19 trillion ($317.55 billion), decreasing by 6.51 percent from the previous month’s closing figures.

The total value of shares traded for August dropped by 21.27 percent from the previous month to SR52.42 billion ($13.98 billion).

The total number of shares traded reached 2.23 billion shares this month compared to 2.58 billion shares traded for July, decreasing by 13.53 percent.

The total number of transactions executed during this month dropped 22.26 percent to 1.24 million from 1.59 million trades for July.

Saudi analysts Mohammad Anqari expected the Tadawul index to remain under pressure from economic developments in the US.

“The situation is still foggy with investors preferring to keep part of their liquidity until things become clear,” Anqari said.

He expected the Saudi market to rally after a 10-day holiday in Saudi Arabia that had already started, recalling that the country’s positive macroeconomic fundamentals would play a role in boosting the market.

“I believe the coming days will witness moves to remove concerns surrounding the world economy,” Anqari said.

Kuwait’s KSE all-share index shed 0.71 percent on weekly basis, closing at 5,785 points.

The benchmark of the UAE stock exchange of Dubai fell 0.23 percent last week, closing at 1,465 points, while Abu Dhabi’s all-share index closed 0.27 percent in the green, at 2,590 points.

Qatar’s index lost 0.24 percent, closing week at 8,171 points, while Bahrain’s benchmark closed unchanged from last week at 1,261 points.

Jordanian shares were volatile last week due to a persistent liquidity shortage, Taher said.

The all-share index of the Amman Stock Exchange gained 0.21 percent, closing week at 2,028 points.

Egypt’s AGX 30 index, measuring the performance of the market’s 30 most active stocks, declined 1.5 percent on weekly basis to close at 4,676 points.

— With inputs from Abdul Jalil Mustafa