Middle East stocks rise on Saudi cash injection

Saudis wave the Saudi national flag after Saudi King Abdullah announced his stimulus package
Image caption Saudi Arabia has largely escaped the mass protests shaking the Middle East

Middle Eastern stock markets have risen sharply, despite regional unrest and western air strikes on Libya, after King Abdullah of Saudi Arabia boosted government spending on Friday.

King Abdullah announced about $93bn (£57bn; 66bn euros) of benefits to lift wages and create jobs in order to quell any potential unrest.

On its first day of trading since the move, the Saudi stock market rose 4.5%, while the Qatari exchange climbed 2.6%.

The Oman exchange was up 1.3%.

"Saudi Arabia contributes almost 50% of the GDP of the Gulf Co-operation Council countries... a boost in the kingdom's economy will reflect in all regional markets and that is what we saw today," said Hesham Tuffaha at Riyadh-based Bakheet Investment Group.

The council comprises Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE).

The latest stimulus package included $67bn to build 500,000 new homes, with additional funds going towards creating new jobs and paying higher wages for civil servants.

A similar package worth about $36bn was announced last month.

Meanwhile, the Saudi central bank said regional unrest would have little impact on the country's economy.

"I have checked all the numbers and there has not been any noticeable outflows or abnormal outflows in Saudi Arabia during the past few weeks so it has been business as normal," said the bank's governor.

One market not to benefit from the Saudi stimulus was Kuwait, where shares fell 1.6% after UAE-based telecommunications company Etisalat dropped its $12bn bid for local rival Zain on Saturday.

Saudi Arabia has largely escaped the mass protests shaking the Middle East.

But in the country's oil-rich Eastern Province, bordering Bahrain where Saudi Arabia has sent 1,000 troops to help quell unrest, there have been protests from the minority Shia Muslim population.