Dec 26 Reuters Major stock markets in the Gulf were mixed in early trade on Tuesday on optimism that the U.S. Federal Reserve would cut interest rates while geopolitical tensions in the Middle East weighed on investor sentiment.

Saudi Arabia39;s benchmark index gained 0.8, led by a 2.5 increase in Al Rajhi Bank and a 2.6 increase in Alinma Bank.

Market expectations that the Fed would cut interest rates next year grew after U.S. data released on Friday showed that by some key measures inflation was now at or below the central bank39;s 2 target.

Monetary policy in the sixmember Gulf Cooperation Council GCC is usually guided by the decisions of the Federal Reserve, as most regional currencies are pegged to the dollar.

Dubai39;s main share index added 0.2, helped by a 0.4 increase in bluechip developer Emaar Properties.

In Abu Dhabi, the index eased 0.1.

Israeli Prime Minister Benjamin Netanyahu has vowed to keep fighting in Gaza until Hamas is destroyed, defying global calls for a ceasefire amid concerns the conflict could spread with U.S. and Iranaligned forces again attacking each other.

Meanwhile, shipping firms had suspended the passage of vessels through the Red Sea that connects with the Suez Canal, which handles about 12 of world trade, and imposed surcharges for rerouting ships.

The Qatari benchmark retreated 0.5, on course to snap seven sessions of gains, dragged down by a 0.9 fall in petrochemical maker Industries Qatar.

Reporting by Ateeq Shariff in…