* Saudi blue chips down on FTSE decision to delay upgrade
* Upgrade decision likely next March
* Kuwait to enter emerging market index in September 2018
* Egypt's index hits record high
* Qatar falls again but poll finds regional funds turn positive
By Celine Aswad
DUBAI, Oct 1 (Reuters) - The Saudi stock index fell on Sunday after news that index compiler FTSE had decided to delay including Riyadh in its secondary emerging market index, while Kuwaiti blue chips were strong after FTSE included Kuwait.
In its annual country classification review on Friday, FTSE praised Riyadh's market reforms but said it would need more time to evaluate their practical impact.
It will therefore assess Saudi Arabia again next March: "It is anticipated that Saudi Arabia will meet the requirements for inclusion as a Secondary Emerging market from early 2018."
Khalid al Hussan, chief executive of the Saudi exchange, told Al Arabiya television that Riyadh could still enter the index as soon as in September 2018, attracting between $2.5 billion and $3 billion of passive funds when it did so.
"There are new measures taking place to allow foreign shares, companies to list on Tadawul in the coming year," he added.
The Saudi index had dropped 0.6 percent last week amid rumours that FTSE's decision would be negative. On Sunday it lost a further 0.7 percent and blue chips that would probably be part of the emerging market index bore the brunt of selling; Saudi Basic Industries dropped 1.0 percent and Samba Financial Group lost 1.3 percent.
FTSE decided that Kuwait would enter its emerging market index in September 2018. Though the news had been expected by many investors, confirmation of the upgrade boosted stocks such as the region's largest warehousing company Agility, which climbed 1.2 percent, and National Bank of Kuwait , which jumped 3.3 percent.
Kuwait's index of the top 15 most valuable shares added 1.9 percent, but the main index fell 0.1 percent.
It is not clear that FTSE index inclusion will bring much money to Kuwait, however. Before the decision, some analysts were talking of passive fund inflows of several hundred million dollars, but in a report on Saturday, Arqaam Capital calculated Kuwaiti stocks might have a combined weighting of only 0.11 percent, resulting in $151.5 million of inflows.
Elsewhere, Qatar's index declined 0.2 percent in its third straight session of losses as most large-caps fell; lender Masraf Al Rayan lost 1.3 percent.
However, the latest Reuters poll of regional fund managers, published on Thursday, showed their sentiment toward Qatar's stock market had on balance turned positive after it plunged in response to sanctions imposed by other Arab states. Valuations have in some cases reached distressed levels.
Egypt's main index added 0.6 percent, rising above the July peak to an all-time high. The index gained momentum last week as it started to price in a reversal of tight monetary policy.
"The market is trading with greater confidence ... and the vote of confidence is evident in the trading volumes. September's volumes were the highest since January," said a Cairo-based broker.
Abu Dhabi's index rose 0.3 percent on the back of blue chips; First Abu Dhabi Bank added 0.5 percent.
The Dubai index fell 0.5 percent as theme park operator DXB Entertainments lost 2.9 percent. But Gulf General Investment rose 2.2 percent after saying it had completed a 2.1 billion dirham ($572 million) debt restructuring that would give it until 2023 to dispose of non-core assets. It did not give details.
* The index fell 0.7 percent to 7,234 points.
* The index declined 0.5 percent to 3,545 points.
* The index added 0.3 percent to 4,411 points.
* The index edged down 0.2 percent to 8,292 points.
* The index rose 0.6 percent to 13,977 points.
* The index dipped 0.1 percent to 6,672 points.
* The index rose 0.4 percent to 5,156 points. (Editing by Andrew Torchia and Dale Hudson)