May 28, 2015 / 9:38 AM / 2 years ago

UPDATE 3-MIDEAST STOCKS-Saudi slips on weak oil; Egypt edges up

(Updates with Saudi Arabia, Egypt open)

DUBAI, May 28 (Reuters) - Saudi Arabia’s stock market inched down in early trade on Thursday after oil prices dropped below $64 per barrel, while the Cairo bourse edged up despite a sell-off in Telecom Egypt shares.

Oil prices fell up to 3 percent for a second straight day on Wednesday as a resurgent U.S. dollar weighed on the market amid concern that U.S. crude supplies may have started rising again. Although Brent has edged up on Thursday, it appears to be headed for a second weekly loss in a row.

A strong dollar is also negative for Saudi Arabian exporters which target emerging markets, as the riyal is pegged to the greenback.

Foodmaker Savola Group, which had already reported a hit to first-quarter revenues because of weaker overseas sales, fell 1.5 percent on Thursday. It was the main drag on Saudi Arabia’s stock index, which slipped 0.2 percent.

Petrochemicals giant Saudi Basic Industries, whose profits are sensitive to oil prices, edged down 0.4 percent.

But Mouwasat Medical Services jumped 3.9 percent after announcing the signing of a contract for construction of a new hospital building.

Egypt’s index climbed 0.2 percent amid a mixed performance by local stocks. Heavyweight Commercial International Bank rose 1.9 percent but Telecom Egypt dropped 3.1 percent.

Index compiler MSCI excluded Telecom Egypt from its emerging markets index this month and passive funds tracking that benchmark are likely to be selling the stock before the move takes effect at the end of this month.

The company has said its board will consider buying some of its shares from the market, but the board meeting will take place next week. (Reporting by Olzhas Auyezov; Editing by Andrew Torchia)

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