Saudi shares decline on fears about Europe crisis, crude prices

Saudi Arabian shares fell for the second day yesterday, led by banks and petrochemical companies, on concern that the euro-area debt crisis may deepen and oil demand subside.

Samba Financial Group slid to the lowest level since February 1, while Al Rajhi Bank, the kingdom’s largest bank by market value, dropped the most in a week. Saudi Basic Industries Corp, known as Sabic, the world’s biggest petrochemical maker, declined 0.5%, the most since May 19.

The Tadawul All Share Index retreated 0.7% to 7,013.91 at the 3.30pm close in Riyadh. The 152-member index has rallied 9.3% this year.

“We expected a weak opening this morning with petrochemicals and banking shares under pressure,” Asim Bukhtiar, a head of research at Riyad Capital, said in response to e-mailed questions. “The euro is expected to further weaken against the US dollar. Combined with neutral to bearish demand outlook, this could mean further declines in crude prices over the week.”

The euro had its biggest weekly loss since December against the dollar as Greek leaders opposed to spending cuts gained in the polls and amid a deepening crisis in Spain. The shared currency fell for a fifth week versus the yen, the longest stretch since October, as German manufacturing shrank and the Bank of Japan refrained from adding stimulus to the economy.

European leaders failed to come up with a plan at a summit on Wednesday to resolve their debt crisis as wagers grew that Greece would abandon the euro. Crude oil fell for a fourth week. July futures touched $89.28 a barrel in New York on May 23, the least since November.

Samba dropped 2.1% to 46.7 riyals. Al Rajhi declined 1% to 72.5 riyals. Sabic fell 0.5% to 94.5 riyals.