Saudi King Abdullah has pledged to boost his citizens' prosperity

Saudi citizens will be able to invest up to 500,000 riyals ($133,000; £70,600), in the bourse - buying and selling on the market for two years.

The individuals can keep any gains but the state will absorb losses.

King Abdullah did not give a starting date for the scheme - which could attract up to 3 million investors.

However he said he was "determined" to implement it.

"The fund will be for people of limited income, employees and others...this group matter most to me," he said.

"If they win then this is their luck, with God's will, and if they lose, then their capital is preserved with us," the monarch said.

Raise standards

The Saudi stock market has lost more than half its value in the last two months, denting confidence in the government as hundreds of thousands of ordinary Saudis lost money.

The king has blamed wealthy speculators for manipulating the market and hopes the fund will bring more moderation to the bourse.

The plan fits in with King Abdullah's aim of raising living standards, analyst Dawoud al-Shiryan said.

"Poverty and unemployment affect terrorism and instability and the king knows the result of this decision, which has important political significance," he added.