September 30, 2018 / 12:34 PM / in 3 months

MIDEAST STOCKS-Saudi gains on oil price rally, state spending boost

* Saudi index closes at highest since late August

* Surge in Industries Qatar lifts Doha shares

* Arabtec, DAMAC shares rally in Dubai

* Kuwait index ends flat, gains 9 pct in Q3

* Qalaa shares up 4 pct in Egypt on strong earnings

By Saeed Azhar

DUBAI, Sept 30 (Reuters) - Saudi shares rose 1.3 percent on Sunday to their highest close in more than a month, fueled by an oil price rally and the kingdom's plans to boost state spending.

The Saudi index closed at 7,999.5 points, the highest level since August 29, with petrochemicals giant Saudi Basic Industries closing 1.5 percent higher and refiner Petro Rabigh up 2.6 percent. Banks also gained with Al Rajhi Bank up nearly 2 percent and Samba Financial Group rising 1.1 percent

On Friday Brent crude futures rose $1 to settle at $82.72 a barrel, with the session high of $82.87 the contract's highest since Nov. 10, 2014.

In the third quarter, Brent has gained about 4 percent.

"The market was attractive at lower levels with forward PE around 14 times, oil is above $80 now and news on the economy is positive with the government saying they are looking at increasing spending over the next few years," said Muhammad Faisal Potrik, head of research at Riyad Capital.

Saudi Arabia's government aims to increase spending by over 7 percent next year in an effort to boost sluggish economic growth, while continuing to cut its budget deficit gradually, finance ministry figures released on Sunday showed.

A gain of more than 2.2 percent in Industries Qatar lifted Qatari stocks by 0.3 percent.

Stocks in oil producing countries are showing strong momentum with oil prices at a four-year high, as U.S. sanctions on Tehran squeezed Iranian crude exports.

Kuwait and Russian stocks have also shown sharp gains in the last quarter. The Kuwait index, was flat on Sunday, is up nearly 9 percent this quarter.

The Dubai index gained 0.3 percent, helped by a 2.6 percent rise in contractor Arabtec which has been riding high since announcing a 3.2 billion dirham ($871 million) contract earlier this month, won by a consortium involving one of its units.

Property firm DAMAC also climbed 2.5 percent ahead of a property show this week where it is expected to showcase new offerings.

Abu Dhabi's index was down 0.3 percent due to weakness in First Abu Dhabi Bank, but Bank of Sharjah closed 1.9 percent higher on merger talk.

Reuters, citing sources aware of matter, reported last week the Sharjah government is considering a possible merger between Bank of Sharjah, Invest Bank and United Arab Bank that could create a lender with about 66.2 billion dirhams ($18 billion) of assets.

Dana Gas also gained 2.6 percent.

Reem Investments, which listed on Sunday on the secondary market, closed at 14 dirhams($3.81) after hitting a high of 16 dirhams in early trade.

Egyptian stocks closed flat, but private equity firm Qalaa Holdings gained 4 percent after it reported a net profit for the second-quarter period, reversing a net loss in the previous financial year.

SAUDI ARABIA

* The index closed up 1.2 percent at 7,999.5 points

DUBAI

* The index closed 0.3 percent up to 2,835 points.

ABU DHABI

* The index fell 0.3 percent to 4,935 points.

QATAR

* The index added 0.3 percent to 9,813 points.

KUWAIT

* The main index ended flat at 5,344 points.

BAHRAIN

* The index dropped 0.8 percent to 1,339 points.

OMAN

* The index rose 0.4 percent to 4,544 points.

EGYPT

* The index ended flat at 14,623 points. ($1 = 3.6730 UAE dirham) ($1 = 17.8600 Egyptian pounds) ($1 = 3.7503 riyals) ($1 = 3.6720 UAE dirham) (Editing by Keith Weir)

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