Sept 15 (Reuters) - Saudi Arabian stocks dropped sharply inearly trade on Sunday after attacks on the kingdom's two key oilplants on Saturday halted more than half of Saudi output.
Other major Gulf markets also traded down.
Attacks were claimed by the Iran-aligned Houthi group,however U.S. Secretary of State Mike Pompeo accused Iran ofleading the attacks and ruled out Yemeni involvement.
The attack knocked out more than half the kingdom's outputand over 5% of global oil supply, in a move expected to send oilprices soaring and increase tensions in the Middle East.
Saudi's index was down 2.1%. Al Rajhi Bankshed 2.7%, and petrochemical maker Saudi Basic Industries(SABIC) retreated 3.5%
SABIC and other petrochemical firms Yanbu NationalPetrochemicals (down 4.7%), Saudi Kayan Petrochemical(down 3.5% ) and National Petrochemical(down 3.7%) all said after attacks that their feedstock supplieswould be affected.
With Sunday's fall, the index has wiped out all its gainsthis year and was trading around 2% lower. It jumped as much as20% at its peak in May, led by foreign investors who have beennet buyers on the entry of Saudi stocks into the MSCI and FTSERussell emerging market indexes.
However, the market began to trend down since May as someSaudi stocks turned overvalued, with the kingdom's slowingeconomy hovering on the edge of contraction, prompting investorsto pull most shares down from lofty valuations.
Dubai's index fell 0.8% weighed down by propertyshares with blue-chip developer Emaar Propertieslosing 1.6%.
Abu Dhabi index traded 0.5% lower with First AbuDhabi Bank and Emirates Telecom bothshedding 0.5%.
Kuwait's index dropped 1.1% led by 2.8% fall inlender Kuwait Finance House
The Qatar index was also down 0.4% with financialsacting as the biggest drag and the Gulf's biggest lender QatarNational Bank losing 1.2%.(Reporting by Shakeel Ahmad in Bengaluru; Editing by TobyChopra)