* Saudi index drops below 200-day average
* Insurers hit by fears of industry shakeout
* Bank Aljazira continues slide on rights issue plan
* Foreign investors keep buying in Qatar
* Egypt's Ezz Steel drops after quarterly loss widens
By Andrew Torchia
DUBAI, Oct 11 (Reuters) - Insurance stocks helped to drag down Saudi Arabia's market on Wednesday because of fears of a shakeout in the industry, while bourses in the United Arab Emirates and Qatar rose, helped by a bullish global trend in equities.
The main Saudi index sank 2.2 percent to 6,890 points, closing significantly below the 200-day moving average, now at 7,042 points, for the first time since last November.
Shares in 32 of Saudi Arabia's 33 listed insurance firms tumbled, with several losing more than 7 percent. Only Bupa Arabia, a favourite of foreign investors, escaped a drop, closing flat.
Most insurers had slid on Tuesday after regulators ordered nine insurance brokers to stop business, citing regulatory violations. The central bank has taken a tough stance on compliance in the sector during recent months, suspending business at several firms, and investors are bracing for a possible shakeout in the sector.
The central bank is preparing to introduce a new supervisory framework in coming months that will force insurers to boost capital as well as improve internal risk controls, two people with direct knowledge of the matter told Reuters.
Central bank officials "said half of the companies that are here today will not be here", one of the sources said. "They want stronger companies in the market."
Bank Aljazira, which had plunged its 10 percent daily limit on Tuesday after announcing it would resubmit a request to the regulator for approval of a 3 billion riyal ($800 million) rights issue, fell a further 6.4 percent in heavy trade.
Banque Saudi Fransi dropped 2.7 percent in its sixth straight day of falls. The bank said it had appointed an independent team to examine violations related to its employee incentive programme in past years, though it expects no material change in its financial statements.
Among other big losers, petrochemical blue chip Saudi Basic Industries lost 2.8 percent. Telecommunications firm Mobily fell 2.6 percent to an 11-year low.
In Dubai, the index rose 0.8 percent on the back of a 1.4 percent rise by Emaar Properties, while a 2.5 percent rise by Dana Gas helped the Abu Dhabi index climb 1.0 percent.
Qatar rose 1.0 percent, gaining for a fourth straight day in a technical rebound from five-year lows. Bourse data showed non-Gulf foreign investors were net buyers by a ratio of about 4:3 and accounted for 43 percent of all buying. Doha Bank jumped 3.4 percent.
Egypt's index edged down 0.1 percent. Ezz Steel dropped 3.8 percent to 17.27 Egyptian pounds after a 2.4 percent fall on Tuesday, when the company reported a quarterly consolidated net loss attributable to shareholders of 550.1 million pounds ($31.3 million) versus a loss of 239.6 million pounds a year earlier.
Pharos Research reiterated its "underweight" rating of the stock with a fair value of 14.00 pounds, saying difficulty in financing working capital would hold the company back from improving utilisation rates at its plants.
* The index sank 2.2 percent to 6,890 points.
* The index rose 0.8 percent to 3,638 points.
* The index gained 1.0 percent to 4,515 points.
* The index climbed 1.0 percent to 8,334 points.
* The index edged down 0.1 percent to 13,816 points.
* The index rose 0.2 percent to 6,626 points.
* The index gained 0.3 percent to 1,275 points.
* The index slipped 0.2 percent to 5,122 points. (Reporting by Andrew Torchia)