RIYADH, April,1: The main Saudi stock index fell by more than 5 per cent in early trading on Saturday with investors selling key blue chips after the bourse relaxed its grip on price movements. Saudi authorities doubled the limit for share price movements in a single day to 10pc, with effect from Saturday, as part of a drive to revive a market that lost a third of its value in a downturn that began in February.

The all-share index had fallen 5.05 per cent to 16,198.60 points by 0805 GMT. It recovered to close the morning session at 16,520 points, down 3.16 per cent.

Turnover reached 7.1 billion riyals ($1.9 billion), compared to a daily average of around 40 billion riyals before the downturn started in late February.

That slide began after the bourse halved the band from 10 per cent. The large speculative funds that drove the rally in Saudi shares for much of last year simply stopped playing the market and turnover slumped.

The market has rallied more than 13.5 per cent since authorities said last week they would restore the 10 per cent band as part of measures inject liquidity into the market.

Companies across the market are also carrying out a 5-to-1 share split, starting on Saturday with agricultural, services and insurance stocks.

Investors are pocketing profits from recent rises but we are seeing strong volatility because of the share split which offers bigger scope for profits, a senior trader said.

Petrochemical firm Saudi Basic Industries, the market’s largest company, fell 5.89 per cent to 1550 riyals. Shares in the third largest firm, Al Rajhi Bank, dropped 4.84 per cent to 2418 riyals.—Reuters