MIDEAST STOCKS-Most Gulf bourses rise on oil supply recovery, diplomacy hopes

By Ateeq Shariff

Sept 23 (Reuters) - Most Gulf equity markets closed higher on Wednesday, buoyed by restored crude flows from a key Saudi pipeline and growing optimism over a diplomatic resolution to the US-Iran conflict.

Global oil markets faced downward pressure on Tuesday after Saudi Arabia restarted operations at its East-West Pipeline, with three sources indicating crude exports from the Red Sea port of Yanbu could soon resume amid broader signs of rising Middle Eastern supply.

Despite US President Donald Trump alternating between stark threats and hints of an imminent accord in response to Iranian defiance, diplomatic efforts at the United Nations continued to gain ground.

This momentum toward de-escalation, coupled with recovering regional supply, alleviated market strain and dragged benchmark Brent crude below the $100-a-barrel mark for the first time since September 8.

Dubai's main share index .DFMGI edged 0.2% higher, helped by a 2.8% rise in toll operator Salik Co SALIK.DU.

Geopolitics stayed front and center for investors, said Milad Azar, market analyst at XTB MENA. While subdued traffic through the Strait of Hormuz kept caution elevated, renewed U.S.-Iran diplomacy and reports of a potential reopening of the waterway buoyed sentiment.

Markets now await concrete diplomatic timelines to anchor lasting stability, he added.

In Qatar, the index .QSI rose 0.3%, with Qatar National Bank QNBK.QA, the Gulf's biggest lender, gaining 0.5%.

In Abu Dhabi, the index .FTFADGI reversed early losses to finish 0.4% higher.

On Wednesday, the Saudi stock market was closed for a public holiday.

Outside the Gulf, Egypt's blue-chip index .EGX30 retreated 1.3%.

Meanwhile, Egypt's central bank will almost certainly leave interest rates unchanged on Thursday, a Reuters poll showed, as inflation eases only gradually and regional risks keep policymakers cautious about resuming cuts.