JEDDAH/DUBAI — Gulf stock markets pulled back slightly on Tuesday after oil prices slipped and Standard and Poor's cut credit ratings and outlooks for several countries in the region. Brent crude slipped more than 1 percent early on Tuesday after the International Energy Agency said the United States would remain the world's top source of oil supply growth until 2020. Meanwhile China's consumer inflation, which came in at a five-year low for January, raised worries about oil demand in the world's second-largest economy, which is also a major consumer of petrochemicals produced in the Gulf. Also, S&P on Monday cut its sovereign debt ratings for Bahrain and Oman, the two financially weakest states in the Gulf Cooperation Council, and revised to negative its outlook on Saudi Arabia, where it said the government may face sustained fiscal deficits in coming years. The agency affirmed its ratings of Qatar and Abu Dhabi. The main Saudi stock index fell 1.0 percent to 9,301 points as petrochemicals major Saudi Basic Industries dropped 2.0 percent. Banks also pulled back and the sector's index fell 1.3 percent - although Saudi banks and other companies are not dependent on overseas borrowing, so they are unlikely to face higher funding costs even if the kingdom's debt rating is eventually reduced. Property developer Dar Al Arkan dropped 3.4 percent after S&P on Monday affirmed the company's corporate credit rating at B+ but revised the rating outlook to negative from stable. S&P said Dar Al Arkan's credit ratios might not recover in 2015 from the company's large acquisitions of land in 2014, but it assumed the company's operational performance would remain stable. The stock had surged 27.9 percent this year. Dubai's stock index edged down 0.3 percent to 3,931 points after failing once again to break through major technical resistance at 3,960-4,008 points, the late December and January highs. Property developer DAMAC tumbled its daily 10 percent limit for a second session in a row after proposing no cash dividend for 2014 on Monday. Abu Dhabi's benchmark lost 0.4 percent to 4,628 points as most listed banks fell. National Bank of Ras Al Khaimah tumbled 5.1 percent and National Bank of Abu Dhabi fell 1.1 percent. Banks were also weak in Oman, where the S&P rating cut could make foreign borrowing more expensive for local lenders. Ahli Bank tumbled 4.4 percent and Bank Muscat, the sultanate's top lender, fell 1.9 percent; Oman's index slid 0.9 percent. However, Gulf bond prices barely moved on Tuesday: the spread of Bank Muscat's 2018 dollar bond against five-year US Treasuries widened just 2 bps. This suggested that most investors remained far from becoming seriously concerned over S&P's actions. Bahrain's bourse shrugged off the rating cut, rising 0.4 percent. Aluminium Bahrain (Alba) climbed 1.2 percent despite reducing its 2014 dividend payout to 0.027 dinar from 0.036 dinar a year earlier. The firm's annual net profit for 2014 was 96.4 million dinars ($255.7 million), up from 79.7 million dinars in 2013, it said on Monday. BBK, formerly known as Bank of Bahrain and Kuwait, jumped 2.1 percent after posting an 11.2 percent increase in 2014 net profit. Egypt's market edged up 0.2 percent amid a mixed performance by local stocks. – SG/Reuters
