April 10, 2017 / 5:40 AM / 3 months ago

MIDEAST STOCKS-Heightened geopolitical risk may keep foreign funds away

2 Min Read

DUBAI, April 10 (Reuters) - Escalation of geopolitical risk in the Middle East may keep foreign funds away from stock markets there on Monday.

At least 44 people were killed in Egypt in bomb attacks on Palm Sunday, prompting anger and fear among Christians and leading to troop deployments and the declaration of a three-month state of emergency.

Egypt's index fell 1.6 percent on Sunday in reaction to the attacks, with most of the stocks favoured by foreign funds exiting positions.

That trend will likely extend on Monday as the majority of foreign portfolio managers - who were on their weekend break on Sunday - may turn net sellers.

Elsewhere in the region, top aides to U.S. President Donald Trump also differed on where U.S. policy on Syria was headed after last week's attack on a Syrian air base.

MSCI's broadest index of Asia-Pacific shares outside Japan fell for a third consecutive session as geopolitical uncertainty heightened. With Brent crude futures, however, trading slightly up at $55.34 per barrel and heading back towards a five-week peak touched on Friday, shares of petrochemical producers in Saudi Arabia - which make up roughly one-fifth of the total market cap of the index - may outperform, lending some support to that index.

Reporting by Celine Aswad; Editing by Biju Dwarakanath

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