Most stock markets in the Gulf ended higher on Thursday after U.S. inflation data paved the way for a likely Federal Reserve rate cut next week, while traders awaited more economic data from the United States.

The U.S. consumer price index rose 0.2% in August, but underlying inflation showed some stickiness, which could result in the Fed delivering a smaller 25-basis-point cut at its upcoming meeting.

Fed policymakers is expected to start the long-awaited rate cuts next week as they seek to reduce the chance of a recession even as stubborn underlying price pressures put them off more aggressive action.

Monetary policy in the six-member Gulf Cooperation Council, including Saudi Arabia, is usually guided by the Fed’s decisions, as most regional currencies are pegged to the U.S. dollar.

Saudi Arabia’s benchmark index gained 0.7%, with Al Taiseer Group rising 1.6% and Al Rajhi Bank increasing 1%.

Among other gainers, oil giant Saudi Aramco was up 0.4%.

Most Gulf markets in the red on weak oil

Oil prices - a catalyst for the Gulf’s financial markets -rose by more than 1% to extend a rebound spurred by concern over Hurricane Francine’s impact on U.S. output, though a gloomy demand outlook capped gains.

The market is supported by optimism regarding next week’s potential Fed rate cut following yesterday’s inflation data, said George Khoury, global head of education and research at CFI.

“Additionally, a rebound in oil prices is providing some support, even though the rise could be temporary. The Saudi market remains under pressure and could potentially continue its downward trend.”

Dubai’s main share index added 0.4%, with blue-chip developer Emaar Properties closing 1.1% higher.

The Qatari benchmark advanced 1.5%, buoyed by a 4.8% jump in the Gulf’s biggest lender Qatar National Bank a day after the bank’s board approved a share buyback of 2.9 billion riyals ($795.61 million).

Outside the Gulf, Egypt’s blue-chip index finished flat.

-------------------------------------- SAUDI ARABIA    rose 0.1% to 11,843 ABU DHABI       fell 0.2% to 9,308 DUBAI           gained 0.4% to 4,365 QATAR           leapt 1.5% to 10,398 EGYPT           was flat at 30,498 BAHRAIN         eased 0.1% to 1,952 OMAN            rose 0.4% to 4,746 KUWAIT          added 0.1% to 7,748--------------------------------------