(Repeats Nov 5 story with no changes to text)
* Scale and suddeness of purge jolts stock market
* International face of Saudi business is detained
* Corruption probe could force sales of equity holdings
* But crown prince gains more power to overule old guard
* Centralisation of authority may be needed for reforms
By Andrew Torchia
DUBAI, Nov 6 (Reuters) - A purge of Saudi Arabia's political and business elites briefly dragged down the kingdom's stock market on Sunday but prices recovered to close higher as some investors bet the crackdown could bolster reforms in the long run.
The size of the purge - 11 princes, four ministers and tens of former ministers were detained by a newly created anti-corruption committee headed by Crown Prince Mohammed bin Salman - raised questions about the stability and predictability of the Saudi government.
For foreigners, a major shock was the detention of flamboyant billionaire Prince Alwaleed bin Talal, who as a big investor in top Western companies such as Citigroup is known as the international face of Saudi business.
Local investors, meanwhile, worried about whether a sustained investigation into corruption could turn up scandals in the kingdom's opaque business world, forcing people implicated to sell off their equity holdings.
But many bankers and analysts saw the purge, which replaced the head of the National Guard, as a power grab by Prince Mohammed, designed to remove any remaining obstacles to his authority and assure his eventual succession to the throne.
This, they said, could help the economy by making it easier for Prince Mohammed to pursue radical reforms that include slashing the state budget deficit, putting more women into employment, lifting a ban on women driving, and selling $300 billion of state assets.
"This is the latest act of concentration of power in Saudi," said Hasnain Malik, global head of equity research at emerging markets investment bank Exotix.
"As unprecedented and controversial as it may be, this centralisation might also be a necessary condition for pushing the austerity and transformation agenda, the benefits of which very few investors are pricing in.”
After initially tumbling as much as 2.2 percent on Sunday, the Saudi stock index rebounded to close slightly higher. Shares related to some of the detained people, such as Prince Alwaleed's Kingdom Holding, sank but most banks rose, a sign of economic optimism.
The purge may increase Prince Mohammed's grassroots support by tackling corruption, a problem that has long plagued the economy.
"It’s a populist move that makes sense because a lot of the princes, businessmen and bureaucrats are corrupt, taking kickbacks and being involved in all kinds of shady deals," said Bernard Haykel, professor of Near East studies at Princeton University.
A danger for financial markets, however, is that Prince Mohammed is shaking up business practices and ties that have lasted for decades, a move which could backfire if it triggers an exodus of money and wealthy individuals from the country.
"The fact that some of the country’s leading business people were arrested will scare the private sector and there might be even more capital flight than before. And most bureaucrats will now be terrified, perhaps justifiably," Haykel said.
Many corporate executives expect Prince Mohammed to persuade or pressure rich Saudis to repatriate some of the billions of dollars which they are believed to have transferred overseas for safe-keeping, and which could now help to kick-start the development projects that he plans.
The corruption crackdown may be an initial step in this effort; the decree creating the committee gave it the right, pending the result of investigations, to seize assets at home or abroad and transfer them to the state Treasury.
James Dorsey, senior fellow at Singapore’s S. Rajaratnam School of International Studies, wrote that Prince Mohammed appeared to be reacting to growing opposition within the royal family and the military to his reforms and Riyadh's military intervention in Yemen.
"It raises questions about the reform process that increasingly is based on a unilateral rather than a consensual rewriting of the kingdom's social contract."
For many people, however, a unilateral approach is seen as the best chance to push through the reforms. A chief economist at a big regional bank said Prince Mohammed's main motive for acting was frustration that reforms were not moving fast enough.
The privatisation programme, for example, including the planned sale of 5 percent of national oil giant Saudi Aramco, has been discussed for many months with little action. Now the programme may pick up.
“The message this should send to foreign investors is it's unwise to bet against MbS," said Sam Blatteis, chief executive of regional advisory firm The MENA Catalysts, using a common abbreviation of Prince Mohammed's name.
“When he wants to get things done, he has proven that he can. This is not a consolidation of power, it’s an acceleration. The wheels of policy-making are moving faster.”
Reporting by Andrew Torchia Additional reporting by Tom Arnold in Dubai and Stephen Kalin in Riyadh