(MENAFN - Arab News) Saudi Arabia's key stock market index gained 0.5 percent yesterday to 7,104 points with support from the banking sector.
Alinma Bank rose 2.3 percent, Samba Financial Group was up 0.8 percent and Bank Albilad climbed 1.5 percent.
The Tadawul All-Share Index (TASI) trimmed May losses to 6 percent.
European shares, meanwhile. fell to their lowest closing level since the start of 2012 after attempts to form a Greek government collapsed, hitting heavyweight financial stocks, and traders said markets could slump further in the coming days.
Reuters reported that the pan-European FTSEurofirst 300 index fell 0.7 percent to 997.70 points - the first time it had closed down below 1,000 points since Dec. 29. It had earlier fallen as much as 1.1 percent to an intraday low of 993.05 points, its lowest intraday level since Dec. 30 when it reached 991.90 points.
The benchmark Athens index fell 3.6 percent to a fresh 20-year low.
Over SR6.86 billion worth shares changed hands on the Saudi stock market yesterday.
Commenting on yesterday's Tadawul rally, Jarmo T. Kotilaine, chief economist at the National Commercial Bank, said: "There does not really seem to be a very clear overriding theme. I suspect the pessimism of recent days is now pretty much priced in for now."
He said: "There was not much in today's news flow to materially affect those assumptions. Some buyers may have taken an opportunity to build up positions after the recent sell-offs. Overall, of course, the global backdrop remains highly uncertain and the mood consequently fragile. There is little to suggest a departure from the recent pattern of recurrent volatility."
Paul Gamble, chief economist and head of research at Jadwa Investment, added: "The rapid gains in share prices over the first quarter would not be sustained and we maintain our end-year projection for the TASI of 8,050."
World stocks, meanwhile, declined and the euro fell to a four-month low against the dollar after Greece said it would hold new elections and worries increased about its possible exit from the euro zone.
Reuters reported that gold touched a 4-1/2-month low as the euro's weakness unnerved investors over the profitability of holding euro-denominated assets.
The turmoil in Greece kept pressure on markets. Investors have been concerned that long-lasting problems in the euro zone and a likely recession in Europe will hit global growth.
Greek politicians again failed to agree on a new government, nine days after an inconclusive election. After Greece's president said the country will hold new elections, the euro slumped and investors fled to the safe-haven dollar.
The Greek news "triggered the fall through 1.2800 and it looks like they can't compromise so they will have to hold elections," Boris Schlossberg, director of FX Research at GFT in Jersey City, New Jersey, was quoted as saying in a Reuters report.
"They are running out of money ahead of elections, so expect European leaders in the next few days to put enormous pressure on them to come up with a workable government along with some sort of extended schedule for the bailout."
The Dow Jones Industrial Average was up 30.27 points, or 0.24 percent, at 12,725.62. The Nasdaq Composite Index was up 16.56 points, or 0.57 percent, at 2,919.14.
Among other global economic news, Reuters said Germany kept hopes for growth alive when it reported that strong exports had helped its economy grow 0.5 percent in the first three months of the year, ahead of market forecasts. Germany's performance offset zero growth in France and recession in Italy and Spain, leaving the whole 17-member euro zone economy stagnating but not in recession.
Some of the optimism from the German GDP data was dispelled after a business survey by the ZEW Institute taken in the first two weeks of May showed a big dip in sentiment since the latest bout of political instability in Greece and the renewed concerns about Spain and Italy's banking systems.
The upbeat German data helped Brent crude price, with Brent June crude up 30 cents at 111.87 a barrel. The German data raised hopes that Germany would steer the way through the European debt crisis.
In the precious metals market, spot gold was down 0.1 percent at 1,555.69 an ounce and earlier hit its lowest since Dec. 30 at 1,547.99. It is down nearly 7 percent in May so far.
The benchmark 10-year US Treasury note was down 4/32, with the yield at 1.7825 percent.
