From Atiq Sharif

April 26 (Reuters) - Most Gulf stock markets posted modest gains at the close of trading on Sunday despite fading hopes for a diplomatic breakthrough to end Iran's trade war, as efforts to revive talks reached a dead end and Tehran and Washington showed little willingness to ease their demands.

Although the ceasefire largely halted the fighting, which began with US-Israeli airstrikes on Iran on February 28, no agreement was reached to end a war that killed thousands, raised oil prices, fueled inflation, and cast a dark shadow over global growth prospects.

The war has destabilized the Middle East, with Tehran launching attacks on Arab Gulf states, and renewed fighting between Israel and Hezbollah in Lebanon after Prime Minister Benjamin Netanyahu ordered a major offensive against Hezbollah targets on Saturday, further straining the U.S.-brokered ceasefire.

The Saudi index rose 0.1 percent, supported by a 0.6 percent rise in Al Rajhi Bank shares and a 1.4 percent increase in shares of Saudi Arabian Mining Company (Ma’aden), but Aramco shares fell 0.4 percent.

Shares in Rabigh Refining and Petrochemical Co. jumped 10 percent to 12.65 riyals per share ($3.37), their highest level since October 2022, after the company posted its first quarterly profit in nearly two years.

In Qatar, the index rose 0.1 percent, supported by a 0.6 percent increase in shares of Qatar Petrochemical Industries.

The Bahraini index closed 0.2 percent higher. The Kuwaiti index rose 0.3 percent. However, the Omani index closed 0.5 percent lower.

Outside the Gulf region, the Egyptian stock market index rose 0.1 percent.

Analysts have lowered their economic growth forecasts for Egypt in a Reuters poll for this year and next, citing rising energy prices and increased inflationary pressures due to the Iran war.

Earlier this month, the International Monetary Fund also lowered its growth forecast to 4.2 percent in 2026 from a previous estimate of 4.7 percent.

(US Dollar = 3.7507 Saudi Riyals)