* World's last ban on female drivers lifted in Saudi
* Saudi insurance stocks post gains of up to 10 pct
* Gains spread across insurance, banking, petrochemical sectors
* Dubai flat, Air Arabia unchanged
By Davide Barbuscia
DUBAI, June 24 (Reuters) - Saudi insurers posted significant gains on Sunday, on hopes that insurance volumes will rise as women began driving in Saudi Arabia, in the end of the world's last ban on female drivers.
This lifted the Saudi exchange, which outperformed other regional markets, and which was still riding the wave of MSCI's announcement last week that it would add the kingdom's stock market to its emerging markets benchmark.
Saudi Arabia's addition could help attract $40 billion from foreign funds, the chairman of the Saudi Capital Market Authority told Reuters last week. The move followed the decision by another index provider, FTSE Russell, to give Saudi Arabia emerging market status earlier this year.
The Saudi index rose 1.8 percent on Sunday, with gains spread across the insurance, banking and petrochemical sectors.
Women in Saudi Arabia took to the roads early on Sunday, celebrating the end of the world's last ban on female drivers. The decision to lift the ban in the kingdom is expected to boost the economy, with industries from car sales to insurance set to reap returns.
Insurance companies led the gains, with Al Rajhi Company for Cooperative Insurance up 10 percent, followed by SABB Takaful Co. and Saudi Indian Company for Cooperative Insurance, which added 7.9 percent and 4.8 percent, respectively.
Some petrochemical companies also added value, following a rise in oil prices after OPEC decided on only modest increases in crude production last week.
Saudi Investment Bank gained 0.4 percent after announcing on Sunday that a subsidiary of JPMorgan Chase & Co agreed to sell its minority stake in the bank for 759.3 million riyals ($203 million).
Outside of Saudi, Gulf markets posted minor gains. In Dubai, where the index was flat, Air Arabia was unchanged. Shares in the airline have declined by more than 10 percent since early last week, when the company said it had hired experts to protect its business interests in private equity firm Abraaj, which has filed for provisional liquidation.
Air Arabia subsequently said it has an exposure of more than $300 million to the embattled buyout firm.
Last week, the United Arab Emirates' top securities regulator asked UAE-listed companies to declare their exposure to Abraaj, the watchdog's chief executive told Reuters.
In Abu Dhabi, Dana Gas jumped 0.9 percent after its shareholders approved last week the issuance of a new sukuk to replace an existing sukuk issued in 2013. The shareholders also approved the dismissal of sukuk-related litigation, marking the end of a protracted legal battle between the firm and its creditors.
* The index rose 1.8 percent to 8,351 points.
* The index was flat at 2,929 points.
* The index added 0.3 percent to 4,551 points.
* The index went up 0.9 percent to 9,005 points.
* The index added 0.2 percent to 4,813 points.
* The index shed 0.2 percent to 1,307 points.
* The index lost 0.4 percent to 4,593 points.
* The index gained 0.3 percent to 16,395 points. (Editing by David Evans)