* Dubai breaks chart resistance, turnover swells
* UAE property stocks rebound from mortgage cap shock
* Speculation that Aldar, Sorouh merger will soon go through
By Rachna Uppal
DUBAI, Jan 2 (Reuters) - Dubai’s market surged in the first trading session of the new year on Wednesday, boosted by a recovery in property stocks, while most other regional bourses also ended higher on the resolution to the U.S. tax talks.
Property shares in Dubai recovered from losses suffered on Monday in response to the central bank’s introduction of caps on mortgage loans. Union Properties surged 8.9 percent and builder Arabtec added 7.1 percent.
“There is good sentiment in the market; Saudi was up on Tuesday, and there was good news from the U.S., which are the main reasons we are seeing the upside today,” said Marwan Shurrab, vice president and chief trader at Gulfmena Investments.
“The focus is still on the mortgage law, which needs more clarification from the authorities. The details will affect stocks in the future, but for the time being, we are seeing a strong performance.”
Turnover in Dubai was the highest since April 5. The index broke technical resistance on its October peak to end 2.7 percent higher at 1,667 points, its highest close since April 24. There is now no major resistance before the 2012 peak of 1,778 points.
It was also a positive picture in Abu Dhabi, where the benchmark rose 1.8 percent, buoyed by real estate stocks. Sorouh Real Estate advanced 4.8 percent and Aldar Properties added 3.9 percent; the firms have been discussing a merger since early last year and the market is speculating about an agreement soon.
“But the details of the merger will be key. Whichever company seems to have come out better will see a strong stock performance going forward,” Gulfmena’s Shurrab added.
The Egyptian pound continued its slide at the central bank’s third auction of foreign currency under its new regime on Wednesday, with $75 million sold to banks at a cut-off price of 6.3510 Egyptian pounds.
But the Egyptian stock market continued rallying, rising 3.2 percent to 5,635 points - above the level where it stood before a political crisis erupted in late November over President Mohamed Mursi’s drive to push through a new constitution which the opposition considers illegitimate.
The market appears to have decided that the currency depreciation, which was inevitable at some point, is positive because the authorities are so far managing it in a stable manner with the new auction system. Also, the move will be positive for some exporters in the long term.
“If the EGX30 continues to rise, it will be due to this devaluation, and it will continue toward 5,700 points,” said a regional trader, declining to be identified.
Other Gulf markets also advanced, mainly due to positive global sentiment. European shares, oil and gold rose strongly on Wednesday after U.S. politicians struck their long-awaited deal to avoid a fiscal crisis.
“This is great news for global growth and explains why shares and other growth-related assets are up strongly today,” said Shane Oliver, strategist at AMP Capital.
Saudi stocks extended gains from the previous session, rising 1.2 percent. They were lifted mainly by the petrochemical sector, as Brent crude hit a one-month high above $112 per barrel. Leading petrochemical stock Saudi Basic Industries climbed 1.4 percent.
Markets in Kuwait and Qatar also rose, up 1.0 percent and 1.1 percent respectively.
But the Muscat bourse was unable to translate positive news on the 2013 state budget into a significant rise, ending nearly flat; it had already climbed in the few days before the budget announcement. The state intends to raise spending by nearly 30 percent over its 2012 plan to 12.9 billion rials ($33.5 billion).
Anticipation of strong fourth-quarter earnings boosted Bank Muscat, however; its shares rose 1.1 percent.
“We witnessed some profit-booking on the blue chips, with the exception of Bank Muscat. We believe Bank Muscat Q4 will be good, and it’s usually the first in the sector to announce earnings, and gives an indication for the rest of the banking sector,” said Adel Nasr at United Securities.
Bahrain was the only Gulf market to end lower, with the index declining 0.2 percent.
* The index advanced 2.7 percent to 1,667 points.
* The index climbed 1.8 percent to 2,678 points.
The benchmark ended near-flat at 5,766 points.
The benchmark rose 1.2 percent to 6,940 points.
* The measure gained 1 percent to 5,994 points.
* The index advanced 1.1 percent to 8,449 points.
* The index rose 3.2 percent to 5,635 points.
* The index slipped 0.2 percent to 1,064 points.