March 27, 2018 / 2:47 PM / a year ago

MIDEAST STOCKS-Saudi outperforms region again before FTSE index decision

* Saudi index hits highest level since August 2015

* Heavyweights SABIC and Al Rajhi push market up

* Many second-tier stocks neglected

* Dubai's DXB Entertainments plunges after big annual loss

* In Egypt, Qalaa jumps again on refinery hopes

By Tom Arnold

DUBAI, March 27 (Reuters) - Saudi Arabia's stock market climbed to a 31-month high on Tuesday, once again outperforming the rest of the region in anticipation of a positive decision by FTSE on Wednesday to include the kingdom in its secondary emerging markets index.

The Saudi index rose 1.1 percent, bringing its gain so far this year to 9.9 percent. A positive decision by FTSE after the close on Wednesday would attract several billion dollars of passive, index-linked foreign funds to Saudi Arabia when the decision was implemented late this year or early next; inflows of active funds would probably be larger.

Heavyweights Saudi Basic Industries and Al Rajhi Bank have been among the main beneficiaries of inflows anticipating a positive decision. That trend continued on Tuesday, with SABIC rising 2.6 percent and Al Rajhi up 1.4 percent. The biggest listed bank, National Commercial Bank , climbed 1.3 percent.

Yanbu Cement jumped 2.7 percent after it signed an agreement to export 1 million tonnes of clinker and half a million tonnes of cement for one year starting in April.

Many second-tier stocks that foreign investors may not be interested in were neglected on Tuesday, and rising shares outnumbered losers by only 96 to 82.

Saudi Arabia's gain has come at the expense of many other Gulf markets as money has flowed from them to Riyadh. In Dubai, the main index lost 0.4 percent ro a 25-month low.

Theme park operator DXB Entertainments, which fell 2.7 percent on Monday after reporting a 1.12 billion dirham ($305 million) loss for last year, plunged a further 7.8 percent to a record low in heavy trade.

Real estate firms Emaar Properties and Deyaar Development slipped 1.6 percent and 2.1 percent respectively as investors remain skittish about the property market's outlook.

United Arab Bank (UAB) and Abu Dhabi National Energy Co (TAQA) fell sharply in Abu Dhabi, helping drag the main index down 0.8 percent.

Talks to finalise the sale of Qatar's Commercial Bank's 40 percent stake in UAB to United Arab Emirates-based Tabarak Investment have been extended to April 2. UAB was down 9.6 percent on Tuesday while TAQA shed 6.3 percent.

The Qatari index closed 0.2 percent down with Qatar International Islamic Bank plunging 8.1 percent as it went ex-dividend.

In Egypt, the blue-chip index gained 1.0 percent as Qalaa Holdings last traded 9.7 percent higher at 2.48 EGyptian pounds in heavy volume, taking its gains to 78 percent so far this month, though it remains far below record highs above 10.0 pounds hit years ago.

Investors are awaiting the launch of Egyptian Refining Co, in which Qalaa is a key shareholder. The project's managing director told local media early this month that its trial start-up would occur in the third quarter, after mechanical preparations finish in the first half of 2018.

"The market is expecting ERC to generate considerable cash flows, which would be up-streamed in dividends to Qalaa Holdings in later years. These dividends should alleviate Qalaa Holdings' debt burdens on the holding level," said Ahmed Hazem Maher, analyst at EFG Hermes.

SAUDI ARABIA * The index was up 1.1 percent to 7,943 points. DUBAI * The index was down 0.4 percent to 3,093 points. ABU DHABI * The index fell 0.8 percent to 4,612 points. QATAR * The index shed 0.2 percent to 8,694 points. EGYPT * The index gained 1.0 percent to 1,7270 points. KUWAIT * The index was down 0.1 percent to 6,619 points. BAHRAIN * The index rose 0.1 percent to 1,327 points. OMAN * The index was up 0.02 percent to 4,759 points. (Additional reporting by Gerard Aoun; Editing by Andrew Torchia and Alison Williams)

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