* Gulf markets focus on factors other than geopolitics
* Saudi CDS show no increase in security worries
* Banks pull Saudi index lower
* But shipper Bahri, involved in attack on tankers, rises
* Q2 earnings miss pulls down Southern Province Cement
By Alexander Cornwell
DUBAI, July 26 (Reuters) - Saudi Arabia's stock market fell slightly on Thursday after Riyadh reported an attack on two oil tankers by Yemen's Houthi movement, while other Gulf bourses moved little, suggesting investors don't expect the event to have much economic impact.
Riyadh said it would temporarily stop shipping oil through a Red Sea strait following the attack. But oil prices rose only modestly, with Brent crude adding 0.9 percent to $74.59 a barrel after gaining 0.7 percent on Wednesday, when the attack reportedly occurred.
"Saudi's oil shipments that did go via the strait can easily be rerouted via the Cape of Good Hope at little additional cost and minimal delay," London-based Capital Economics said.
It said stock markets in the Gulf were focusing instead on signs of economic recovery in the region and improvement in the global market backdrop.
Credit default swaps, used to insure against the risk of a Saudi sovereign debt default and an indicator of geopolitical tensions in the Gulf, barely moved on Thursday.
The Saudi stock index closed down 0.4 percent as banking shares slipped, with Al Rajhi Bank and National Commercial Bank falling 0.5 percent and 1.2 percent respectively.
Southern Province Cement dropped 2.6 percent after reporting a 62 percent tumble in second-quarter net profit to 36 million riyals, far below analysts' average forecast of 82 million riyals ($21.9 million).
But National Shipping Co (Bahri), which said one of its tankers was attacked, rose 2.6 percent.
Many fund managers view Saudi Arabia’s stock market as richly valued, with SABIC at over 20 times trailing earnings. But major Saudi investment bank Jadwa said in a report on Wednesday that the market could rise further in coming months as active foreign funds began entering ahead of Riyadh’s entry into MSCI’s emerging market index next year.
“We view a rise of at least 20 percent between now and early 2019 as totally plausible,” which would push the stock index to around 10,000 points, Jadwa said.
In Dubai, the index was almost flat but Dubai Investments added 1.5 percent. Emaar Properties and its unit Emaar Development rose 0.4 percent and 0.8 percent, a day after Emaar gave an update on its Dubai Creek Harbour development where it is building the world's tallest structure, the Dubai Creek Tower.
Abu Dhabi's index closed up 0.3 percent with Emirates Telecommunications Group rising 0.6 percent after reporting this week a 12.3 percent increase in second quarter profit.
But in Qatar, telecommunications firm Ooredoo fell 1.3 percent, causing the index to close down 0.1 percent.
* The index was down 0.4 percent to 8,368 points.
* The index rose 0.1 percent to 2,949 points.
* The index gained 0.3 percent to 4,844 points.
* The index was down 0.1 percent to 9,608 points.
* The index was up 0.4 percent at 5,379 points.
* The index rose 0.4 percent to 1,368 points.
* The index dropped 1.6 percent at 4,336 points.
* The index edged up 0.1 percent to 15,199 points. (Editing by Andrew Torchia and Alison Williams)