Most Gulf stock markets fell on Sunday, tracking weak oil prices, but Saudi Arabia rose after the government said it would keep borrowing to finance important projects and Etisalat lifted Abu Dhabi ahead of expected foreign fund inflows.

Oil futures fell on Friday as traders shrugged off a drop in the number of U.S. rigs drilling for oil and focused instead on a supply glut and declining stock prices on Wall Street. Brent crude settled down $1.07 at $49.61 a barrel; it fell almost one per cent on the week.

But Saudi Arabia's main stock index climbed 0.6 percent on Sunday after Finance Minister Ibrahim Alassaf said the cabinet would press ahead with projects deemed important for the economy, while cutting unnecessary expenses to compensate for low oil prices.

In an interview with CNBC Arabia, Alassaf said the government would continue issuing bonds and might also sell sukuk to finance specific projects. Rating agency Standard and Poor's said last week that banks' profitability would benefit from buying government debt.

"We believe the banks will accommodate government issuance through a gradual shift from low-yielding, short-term liquid assets and private sector credits to higher-yielding, longer-term government exposures," it said in a report.

"We expect this shift to be positive for the banks' net interest margins and revenue generation."

Al Rajhi Bank jumped 2.3 percent on Sunday and was the main support for the Saudi index, while Banque Saudi Fransi jumped 2.6 per cent.

Alassaf's interview was positive for the market in general because it was one of the first times that a top Saudi official had described publicly how Riyadh would cope with an era of cheap oil; a lack of transparency in economic policy-making has worried some investors.

But retailers Jarir Marketing and Alhokair fell 2.4 and 4.7 percent respectively after local newspaper Al Watan reported the government was studying whether to cut state subsidies that keep domestic gasoline prices at some of the lowest levels in the world.

Such a move, which may still be years in the future, could eat into discretionary income and force Saudis to cut spending on items such as the smartphones and tablets sold by Jarir.

Also, the government said it would open up the retail and wholesale trade sectors to companies fully owned by foreigners. This could eventually mean more competition for Saudi retailers.
    
Elsewhere in the Gulf, telecommunications firm Etisalat surged 4.3 percent, lifting the Abu Dhabi index 0.7 percent, after the company said it would allow foreign and institutional investors to own its shares from September 15 in a long-awaited move.

Analysts say this is likely to prompt index compiler MSCI to include the second-biggest telecommunications operator in the Gulf in its emerging markets benchmark. MSCI will announce the details of its next quarterly review on November 12.

All other Gulf markets were negative. Dubai's index fell 0.8 per cent with most stocks in the red, although developer Damac, the most traded company, pared early losses and climbed 0.9 percent, buoyed by an upcoming dividend.

Qatar's bourse lost 0.6 per cent, also falling broadly.

Oman slipped 0.05 per cent and Kuwait's index was down 1.6 per cent.

Kuwait-listed shares in GFH, the Bahrain-based investment firm, tumbled 5.4 per cent after GFH said its board of directors had approved the voluntary delisting of its shares from the Kuwait Stock Exchange.

The company said this would focus trading on its home listing and the main secondary market for its shares, Dubai, where volume is highest. In Dubai, GFH fell 1.8 per cent.

Egypt's main index pulled back 0.3 per cent after jumping two per cent in the previous session. Pioneers Holding dropped 3.2 per cent after the firm said market demand for its shares offered as part of a capital increase was close to zero.

In the first phase of the 3 billion Egyptian pound ($383 million) public offer, it had received  applications for just 136 shares out of 170 million shares offered.-Reuters