Egyptian stocks fell on Thursday because of security worries after bloody clashes with militants in Sinai. Gulf markets were mixed as the Greek debt crisis and soft oil prices were offset by the bargain hunting of local retail investors on dips. Reopening after a two-day holiday, Egypt's share market dropped 0.7 percent to 8,315 points. It has been falling for a month, heading for a test of technical support at its May low of 8,261 points.
The army said on Wednesday that more than 100 militants and 17 soldiers were killed after simultaneous assaults on military checkpoints in North Sinai. Islamic State claimed responsibility for the attacks.
This followed the assassination of Egypt's top public prosecutor in a car bomb attack in Cairo on Monday. Although investors have been willing to tolerate sporadic militant violence in Egypt over the last year, some worry that this week's events mark an escalation.
"The Egyptian army has so far failed to reverse the Sinai insurgency, raising the likelihood of it spilling over into mainland Egypt," consultancy IHS said in a report. Financial firm EFG Hermes fell 1 percent and real estate developer Talat Mostafa lost 1.3 percent.
However, Telecom Egypt rose 1.4 percent after the telecommunications minister said the company was expected to acquire a long-delayed 4G mobile licence next year.
The central bank resumed depreciating the Egyptian pound on Thursday for the first time in five months, letting it drop 1.3 percent.
Currency depreciation may please foreign institutional investors who believe the pound is overvalued and needs to find a sustainable level. Non-Arab foreigners were net buyers of Egyptian stocks by a large margin on Thursday while local investors were sellers, exchange data showed.
Elsewhere, the Saudi stock index rose 0.4 percent. PetroRabigh climbed 2.2 percent after saying it would pay a cash dividend of 0.5 riyal per share for 2014. It is the first time that PetroRabigh, a joint venture between Saudi Aramco and Sumitomo Chemical, is paying a dividend since at least 2010, according to Thomson Reuters data.
Takween closed up 1.2 percent at 81.50 riyals, well off its intra-day high of 88.25 riyals, in unusually heavy trade. On Wednesday it had soared 9.2 percent. Saudi Ground Services pulled back 2.5 percent to 72.50 riyals, ending a bull run that began with its listing at 50 riyals last Thursday.
Dubai's index edged down 0.1 percent as Amlak Finance slipped 5.0 percent.
However, construction firm Drake & Scull surged 11.5 percent in its heaviest trade since October after saying it had raised its limit for ownership by Gulf Co-operation Council (GCC) nationals to 100 percent from 49 percent. GCC nationals owned 57 percent on Wednesday.
Abu Dhabi's benchmark share index gained 0.6 percent as telecommunications operator Etisalat climbed 1.5 percent, rebounding after a week-long decline.
Abu Dhabi National Energy Co dropped 5.4 percent in thin trade after the company said in a brief statement that it was "not engaged in merger discussions with any government or other entity". Qatar's market edged up 0.6 percent as Qatar National Bank, which had lost 2.1 percent on Wednesday, rebounded 1.1 percent.