* Saudi index closes above 200-day average
* Oil price surge to four-year peak lifts petrochemicals
* Kuwait gains post FTSE Russell emerging market inclusion
* Qatar loses ground on Industries Qatar's weakness
By Saeed Azhar
DUBAI, Sept 25 (Reuters) - Saudi stocks rose 1.8 percent on Tuesday on the back of a surge in oil prices, while Kuwaiti shares gained on hopes of more foreign fund flows after inclusion in the FTSE Russell emerging market index.
Oil prices jumped to a fresh four-year high, helping push Petrochemicals giant Saudi Basic Industries up 2.8 percent, refiner Petro Rabigh 1.6 percent and Al Rajhi Bank 2.6 percent.
The Saudi index closed at 7,905 points on Tuesday above its 200-day average, which analysts see as a positive technical signal for the index.
Its dive below the average early this month, for the first time this year, had triggered heavy selling by technical investors.
Shares of Al Tayyar Travel plunged 7.6 percent on news that Saudi Arabian Airlines has ended its contract with the firm to provide travel services to students enrolled in the Ministry of Education. It closed at 20.54 Saudi riyals ($5.48), its lowest closing price since listing.
Ticketing contracts for the Ministry of Education accounted for 30 percent and 32 percent of the total value of reservations, according to the financial statements of 2015 and 2016 respectively, it said.
Kuwait's widely-watched index rose 1.1 percent as it entered the first phase of its entry into the FTSE Russell emerging market index on Monday. The second stage will be on Dec. 24.
"There's more activity due to Kuwait's inclusion in the emerging market index," said Marie Salem, director of capital markets at FFA Dubai.
There is more value in Kuwaiti companies and their potential will be harnessed by the entry of more foreign funds to the market, she said.
Arqaam Capital said in a report this month that $1 billion of passive inflows are expected in the wake of the index inclusion.
National Bank of Kuwait and Kuwait Finance House each climbed 1.5 percent.
The premier index has already gained more than 11 percent year to date. Investment activity increased this quarter ahead of the inclusion in the index, boosting the market by nearly 8.87 percent. In Dubai, the index was flat, while Qatar's index was 0.2 percent lower, weighed down by a 1 percent decline in Industries Qatar and a 0.8 percent drop in Qatar Insurance Co.
The Egypt index climbed 1.1 percent on the back of a 1.5 percent gain in Commercial International Bank of Egypt and a 2.9 percent rise in tobacco-maker Eastern Co .
* The index closed up 1.8 at 7.905 points
* The index closed flat to 2,754 points.
* The index ended flat to 4,892 points.
* The index lost 0.2 percent to 9,713 points.
* The main index rose 1.1 percent to 5,340 points.
* The index ended flat to 1,355 points.
* The index rose 0.7 percent to 4,485 points.
* The index rose 1.1 percent to 14,351 points. ($1 = 3.6730 UAE dirham) ($1 = 17.8600 Egyptian pounds) ($1 = 3.7503 riyals) (Aditional reporting by Andrew Torchia; Editing by Andrew Heavens)