JEDDAH: Higher oil prices and stronger global equities failed to lift most stock markets in the Middle East on Thursday and trading volumes were modest, showing many investors remain wary of the longer-term outlook for stocks.

Brent oil rose nearly 2 percent to more than $49 a barrel while Asian and European markets climbed following a surge on Wall Street.

But this did not stimulate trade in the Gulf, where Saudi Arabia’s stock Tadawul All-Share Index dropped 0.8 percent. Al-Rajhi Bank sank 3.7 percent while miner Maaden, hit this week by the global sell-off in commodities-related shares, lost a further 3.1 percent to a nine-month closing low.

The stock market was unmoved by news that Citigroup and emerging markets-focused investment manager Ashmore Group had obtained licenses to invest directly in Saudi stocks. This brings the number of foreign institutions licensed to do so up to at least three.

Inflows of foreign funds into the market are expected to remain very gradual, and local investors are worried by factors such as the weak outlook for oil prices and uncertainty over the level of spending.

Across Gulf Arab economies, investors are anticipating a tightening of banking sector liquidity as cheap oil cuts the flow of state revenues into bank deposits, and banks set aside money to buy bonds which governments will use to cover their budget deficits.

In a report on Thursday, Standard & Poor’s said strength in Gulf banks’ earnings in the first half of this year was unlikely to continue.

“Owing to the knock-on effects of lower oil prices on growth and asset quality, earnings could weaken over the next several quarters,” it said.

Dubai’s stock index rose 0.7 percent. Blue chip Emaar Properties added 1.4 percent but most gains were by low-priced speculative stocks such as Arabtec, which was the most heavily traded share and gained 4.9 percent.

Abu Dhabi edged up 0.4 percent, supported by telecommunications blue chip Etisalat and First Gulf Bank, both up 0.7 percent.

Qatar edged down 0.1 percent as drilling rig provider Gulf International Services fell back 0.8 percent.

Egypt’s index slipped 0.3 percent as Arabia Investments dropped 4.6 percent but investment firm Qalaa Holdings CCAP.CA edged up 0.6 percent.=