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DUBAI, Dec 22 (Reuters) - Gulf stock markets look set to consolidate in quiet trade on Thursday ahead of the announcement of Saudi Arabia's 2017 state budget in the afternoon.
An official news conference on the budget is expected to start at 1400 Saudi time (1100 GMT), although official statements could begin coming out before then.
Sources familiar with budget planning told Reuters the government would reveal substantial progress in cutting the budget deficit from a record high in 2015, and that state spending would be raised in 2017 to support economic growth.
This would be positive for the stock market, but many investors may wait to buy stocks until they see details of austerity policies in the budget. Domestic energy prices are expected to be increased to ease the government's subsidy burden, but it is not clear whether this will merely affect domestic fuel prices or also prices of natural gas feedstock, which would be negative for petrochemical producers.
Low trading volumes in most Gulf markets in recent days suggest some investors are already on the sidelines for the New Year holiday period.
The global market environment is neutral to slightly negative, with MSCI's broadest index of Asia-Pacific shares outside Japan down 0.5 percent and oil prices having slipped moderately overnight. (Reporting by Andrew Torchia)