Regional markets were mixed, with Egypt gaining on optimism that company results would begin to improve after a popular uprising damaged the economy.

Saudi petrochemicals led a drop by the 15 top stocks, with Saudi Basic Industries Corp. (SABIC) and Yanbu National Petrochemical Co. (Yansab) down 1.3 percent each.

The index fell 1 percent to 6,091 points.

“The major driver for Saudi is the global macro picture and where oil prices are going,” said Hesham Tuffaha, Bakheet Investment Group head of asset management.

“If we get a week of calm on global markets, Saudi investors will shift their focus onto third-quarter results.”

He forecast profits in petrochemicals and banking would fall quarter-on-quarter, with petrochemical margins tied to oil prices and banks failing to increase lending activity, with local consumption helping retail, construction and food. 

“These sectors will most likely achieve double-digit growth compared to Q2,” added Tuffaha.

The Tadawul All-Share Index (TASI) fell 1 percent to 6,091 points.

Dubai and Abu Dhabi extended drops, as Dubai Islamic Bank fell 1 percent and Deyaar lost 2.6 percent. The Dubai index fell 0.3 percent to 1,479 points. The Abu Dhabi measure dipped 0.4 percent to 2,603 points.

“Our markets are not suffering from high valuations or a bad economy, but low liquidity and that cannot change without intervention from government or semi-government institutions,” said Mohammed Yasin, CAPM Investment chief investment officer.

Dubai turnover, at a six-year low in 2010, is still lackluster and the index is down 9.3 percent in 2011.

The market’s woes come despite an upbeat outlook for the UAE economy, which is forecast to grow 3.7 percent in 2011, according to a Reuters poll in June.

Real estate dominates Dubai’s stock market and is mired in a deep correction as property prices plunged by more than half from 2008 peaks.

Egypt’s main index rose 1.2 percent to 4,716 points, taking its gains to 5.3 percent since early August’s two-year low.

“There are good volumes going through the market,” said CIBC trader Omar Darwish.”(Gains are) mainly driven by pre-earnings as everyone is looking forward to good third-quarter results.”

Orascom Construction, due to report results this week, rose 2.3 percent and dominated trading.

Kuwait’s index rose for a seventh session in eight since late August’s seven-year low, but a sustained recovery is unlikely, with traders dismayed the oil exporter’s $110 billion development plan revealed in 2010 has come to little. 

“People had bet on the plan providing the market with some momentum, but it now seems it is on hold and only ever seemed like a vague spending plan, rather than a plan to build the nation,” said a Kuwait trader who asked not to be identified.

The Kuwaiti benchmark rose 0.2 percent to 5,853 points. 

The Qatari index dropped 1.6 percent to 8,307 points.

The Omani index rose 0.4 percent to 5,793 points, while the Bahraini measure climbed 0.2 percent to 1,261 points.