* Falling Saudi stocks outnumber gainers by nearly 2:1
* But trading volume shrinks further
* Trump says does not want to walk away from Saudi Arabia
* Banks weigh on Egypt blue-chip index
* Qatar's Ahli Bank jumps on results
By Abinaya Vijayaraghavan
Oct 18 (Reuters) - Saudi Arabia's stock index traded very narrowly on Thursday as fears partially eased that the disappearance of Saudi journalist Jamal Khashoggi could damage the market by hurting foreign investment.
U.S. President Donald Trump said on Wednesday he did not want to walk away from Saudi Arabia and that the United States needed the kingdom's cooperation -- a sign that Riyadh might escape any serious U.S. sanctions if an investigation finds Khashoggi was killed by Saudi personnel.
Also, state-linked Saudi funds bought blue chips in a support operation when the market plunged earlier this week, convincing some investors that there is little further downside for now at least.
The Saudi index closed 0.1 percent lower. Falling stocks outnumbered gainers by 109 to 60, but a further drop in trading volume, by almost a third compared to Wednesday, showed investors were no longer keen to dump equities.
National Commercial Bank, which soared during the support operation as funds bought it, retreated 2.9 percent on profit-taking. Top petrochemical producer Saudi Basic Industries dropped 0.8 percent.
But Saudi Telecom added 1.8 percent and Banque Saudi Fransi surged 3.0 percent. Khaleej Training added 2.2 percent after winning a project worth 23.1 million riyals ($6.2 million) from the General Authority of Zakat and Tax.
Egypt's blue-chip index slipped 1.2 percent, pressured by banks. Commercial International Bank lost 2.1 percent and investment bank EFG Hermes lost 4.1 percent.
Dice Sport and Casual Wear slid 8.3 percent in very thin trade. The company said it would raise its stake in Alexandria Ready Made Clothes to 100 percent via a 2 million Egyptian pound ($111,420) deal.
Madinet Nasr, which had soared on SODIC's plan for a merger via share swap, fell back 3.8 percent and SODIC shed 3.2 percent.
The Dubai index gained 0.6 percent as DAMAC Properties added 3.6 percent and National Central Cooling (Tabreed) was up 2.4 percent.
The Qatar index, which earlier this weak broke technical resistance on the August and September peaks, was up 0.4 percent with Doha Bank rising 1.8 percent. EFG Hermes raised its rating on the stock to 'neutral' from 'sell'.
Ahli Bank was up 5.1 percent after reporting an increase in its third-quarter profit.
Bahrain's index advanced 0.8 percent, helped by a 10 percent jump in Gulf Hotel Group and a 3.4 percent increase in National Bank of Bahrain after a rise in its profit for the first nine months of the year.
SAUDI ARABIA * The index lost 0.1 percent to 7,648 points. DUBAI * The index added 0.6 percent to 2,758 points. ABU DHABI * The index rose 0.6 percent to 4,989 points. QATAR * The index was up 0.4 percent to 10,193 points. KUWAIT * The index lost 0.2 percent to 5,173 points. BAHRAIN * The index rose 0.8 percent to 1,323 points. OMAN * The index shed 0.2 percent to 4,444 points. EGYPT * The index fell 1.2 percent to 13,644 points. (Editing by Andrew Torchia, William Maclean)