July 11, 2017 / 1:33 PM / in 14 days

MIDEAST STOCKS-Banking shares lead Middle East higher ahead of Fed testimony

4 Min Read

* Saudi banks mixed as investors focus on Q2 results

* United Electronics surges again on CEO bullish comments

* Egypt reclaims all time high

By Celine Aswad

DUBAI, July 11 (Reuters) - Blue-chip banks pushed Middle East stock markets slightly higher on Tuesday, a day ahead of the testimony from Federal Reserve Chair Janet Yellen for clues on when the central bank would tighten U.S. monetary policy.

Yellen's semi-annual monetary policy testimony before Congress will be on Wednesday and Thursday. San Francisco Federal Reserve President John Williams said on Tuesday in Sydney that it was a reasonable view to expect one more rate hike this year, and his own view was to start adjusting the central bank's balance sheet in the next few months.

Most Gulf currencies are pegged to the dollar and any monetary policy change in the United States is usually mimicked by Saudi Arabia, United Arab Emirates and Qatar.

In Doha, the majority of the listed banks were firm with the largest of them, Qatar National Bank adding 1.2 percent. The index rose 0.4 percent.

In the United Arab Emirates, Abu Dhabi Commercial Bank added 1.6 percent and Union National Bank inched up 0.4 percent, helping take the index 0.2 percent higher. In neighbouring Dubai, Dubai Islamic Bank added 1.4 percent and the index rose 0.6 percent.

Saudi Arabian banks were mixed as some investors turned their focus to upcoming second quarter results. Heavyweight National Commercial Bank edged up 0.2 percent after rising as much as 1.4 percent earlier in the day.

Analysts at Riyad Capital expect net income for the sector to be flat in the second quarter from the year ago period as provisions may continue to weigh on performance - which they have been for the last several quarters - and because of a dip in credit demand. Nevertheless, they predict operating margins to witness some improvement.

"While SAIBOR (the interbank lending rate) has been flat in the quarter, we believe cost of funds have declined given rising non-interest bearing deposits combined with some growth in advances," said the note by Riyad Capital.

Mobile phones and home appliances retailer United Electronics Company (Extra) surged 8.1 percent in heavy trade to its highest close since November 2015 after its chief executive, Mohamed Fahmy, told financial news website, Argaam, on Monday that Extra aims to boost sales through its online portal, and strengthen partnerships with suppliers and brand offerings.

Its shares soared by their 10 percent daily limit on Monday after reporting a near quadrupling in second quarter net income from a year earlier and a 15 percent growth in sales.

The index added a small 0.1 percent.

In Egypt, the index gained 1.5 percent to 13,684 points, reclaiming the all-time high hit on June 8.

Shares of private equity firm Qalaa Holding jumped 5.2 percent in high volumes. On Saturday the company reported a narrowing first quarter net loss of 384 million Egyptian pounds ($21.54 million).

Analysts at Naeem Brokerage expect positive operating trends in the coming quarters, although they "still anticipate losses" mainly because of higher debt servicing costs.

Orascom Telecom, the most traded stock of the day, jumped 5.9 percent, its second straight session of strong gains. On Monday the company reported a huge leap in its first quarter net profit.

Highlights

Saudi Arabia

* The index added 0.1 percent to 7,245 points.

Dubai

* The index added 0.6 percent to 3,440 points.

Abu Dhabi

* The index rose 0.2 percent to 4,409 points.

Qatar

* The index gained 0.4 percent to 9,030 points.

Egypt

* The index climbed 1.5 percent to 13,684 points.

Kuwait

* The index added 0.5 percent to 6,779 points.

Bahrain

* The index edged up 0.3 percent to 1,312 points.

Oman

* The index rose 0.2 percent to 5,171 points. ($1 = 17.8700 Egyptian pounds) ($1 = 3.7501 riyals) ($1 = 17.8300 Egyptian pounds) (Editing by Pritha Sarkar)

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