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RTRS Comex copper prices resume climb, investors eye US jobs data
 
* Egyptian devaluation could resolve hard currency shortage

* But many foreign investors remain cautious

* High interest rates, inflation are threats

* Saudi rises for second week after bond issue

* Qatar sinks after breaking technical support

By Celine Aswad

DUBAI, Nov 3 Egypt's blue chip equities index jumped on Thursday after the central bank floated the currency, a step which could eventually resolve its hard currency shortage, while Saudi Arabia gained for a second straight week.

The Egyptian EGX30 index soared as much as 8.4 percent in the first hour of trade after the central bank devalued the pound by 32.3 percent to an initial guidance level of 13 pounds to the U.S. dollar.

But reflecting caution among many investors, and profit-taking by those who had anticipated the devaluation, the index closed only 3.4 percent higher in the heaviest trade since early August. The broader EGX100 index rose just 1.7 percent.

Authorities hope that by persuading investors that the Egyptian pound is finally fairly valued, the devaluation will draw billions of dollars into Egypt, and encourage hundreds of thousands of Egyptians living overseas to send money home.

"We see the move as an encouraging one for investors to re-tap Egyptian assets, especially those in local currency," strategists at EFG Hermes said in a note.

Commercial International Bank, the largest listed lender, jumped 6.2 percent. EFG Hermes said the bank would be one of the main beneficiaries of flows from all investor types given its weight in local, regional and emerging market indexes.

But some major stocks closed lower, including Qalaa Holdings , down 3.9 percent, and EFG Hermes itself, down 2.0 percent.

The devaluation is expected to cause a rise of inflation, which will hurt consumer spending power, and it was accompanied by an interest rate hike of 3 percentage points. Egypt's dependence on imports means a weaker currency may not lead to much of an export boom.

For these and other reasons, many foreign fund managers said they were not rushing into Egypt. Maarten-Jan Bakkum, investment strategist for emerging markets at Hague-based NN Investment Partners, said the currency float offered opportunities but he would err on the side of caution.

"First the currency has to stabilise and they have to fix their fiscal problem. The deficit is in double digits, the economy is weak because of the tourism crisis and Egypt is very sensitive to the weakness in global trade as that impacts Suez Canal revenues."

The currency float is expected to clear the way for the International Monetary Fund to reach a final agreement on extending a $12 billion loan to Egypt. Mohamed Eljamal, managing director of capital markets at Abu Dhabi's Waha Capital, said the market was eager for the announcement of the loan and wanted to see whether the devaluation eliminated the gap between the official and black currency markets.

SAUDI UP, QATAR SINKS

The Saudi index rose 1.2 percent, taking its gains for the week to 2.1 percent as gainers outnumbered losers 147 to 12. The government's $17.5 billion international bond issue last month eased concern about tight banking system liquidity.

Banking shares remained strong, with 11 of 12 traded lenders climbing. Mid-sized lender Bank Aljazira climbed 2.2 percent.

In Dubai, the index closed up 0.2 percent, with small and mid-cap shares the chief gainers. Gulf Navigation jumped 7.0 percent and lender Mashreq bank surged 6.2 percent.

But Qatar's stock index sank 1.2 percent to 9,956 points after slipping 1.3 percent on Wednesday, when it broke technical support at 10,153-10,160 points, where the September low coincided with the 200-day average.

Telecommunications firm Ooredoo retreated 3.2 percent and Qatar National Bank lost 2.1 percent.

Fund managers have expressed concern about high valuations in Qatar and a Reuters poll published this week found them on balance expecting to cut allocations to that market in the next three months.

THURSDAY'S HIGHLIGHTS

SAUDI ARABIA

* The index rose 1.2 percent to 6,060 points.

DUBAI

* The index added 0.2 percent to 3,298 points.

Source