Saudi shares gain on the back of New York rally

The Tadawul has played catchup to this weeks' dramatic events on Wall Street.

Saudi shares gained today, following the lead set by New York and Europe on Friday. In afternoon trading the Saudi Tadawul, the only GCC exchange open today and one of the few in the world to do so, soared to nearly 4 per cent at one point, but later settled back to a 2.5 per cent gain. It comes 24 hours after the US government said it would set up a fund worth hundreds of billions of dollars to purchase all the toxic sub-prime securities held by Wall Street's investment banks.

The market closed for the weekend on Wednesday afternoon, so did not have a chance to react to the plunge of the New York exchange that evening led by fear that investment banks Goldman Sachs and Morgan Stanley were about to collapse. The Tadawul rose on Wednesday, so today's rise was merely a reaction to this week's market driving events, dealers said. Saudi Basic Industries led the rise, increasing by 4.7 per cent, while Al Rajah Bank, the country' largest, rose by 4.8 per cent.

Despite the rise, the market is still performing poorly - it is 1,400 points lower than it was in late August. The Tadawul has lost 32 per cent of its value this year. Saudi Arabian shares advanced for the second day, led by Saudi Basic Industries, the world's biggest chemical maker by market value. [e-mail]