* Egyptian importers, banks may benefit from rate hike
* Ezz steel climbs after annual earnings
* Saudi dragged lower before Ramadan
* Dubai's DFM, DXBE hit by Q2 revenue worries
* MSCI banking shares outperform in Qatar
DUBAI, May 23 (Reuters) - Egypt's stock market on Tuesday recovered some of the previous day's heavy losses while Gulf bourses were weaker as investors booked profits ahead of the holy month of Ramadan, when trading volumes and liquidity often decrease.
Cairo's index rebounded 1.1 percent after tumbling 2.5 percent on Monday, its largest single-day decline since Jan. 19, after the central bank unexpectedly raised interest rates by 2 percentage points to fight sky-high inflation.
The surprise move prompted heavy selling by local retail investors but several foreign fund managers said they did not expect a lasting impact on the market, partly because of the loose links between interest rates and the real economy in Egypt.
Importers may benefit from lower input costs if the rate hike strengthens the Egyptian pound, while many exporters should remain competitive if inflation eases, said a note by Dubai's Arqaam Capital.
Arabian Food Industries, which depends on imports for its food production, rose 1.4 percent. Shares of the largest listed lender, Commercial International Bank, gained 0.5 percent.
"Most banks will be positively affected due to positive net asset-liability management positions, boosting net interest margins, despite potential impact on credit growth," Arqaam said.
Ezz Steel jumped 2.9 percent after it posted a consolidated net profit attributable to shareholders of 162.5 million Egyptian pounds ($9.0 million) for the last fiscal year versus a net loss of 418 million pounds a year ago.
The company said a foreign exchange gain after the flotation of the Egyptian pound in November had added 816 million pounds to its bottom line.
The Riyadh index pulled back 0.7 percent as 147 shares declined and only 11 rose in modest volumes.
"This is the cash-out before Ramadan, and it is not uncommon to see some unwinding ahead of the quieter period," said a Jeddah-based trader. Ramadan is expected to start this Saturday.
Dubai's index dropped 0.8 percent with the only listed exchange in the Gulf, Dubai Financial Market, retreating 3.6 percent.
In recent months Dubai's stock market has been underperforming its regional peers and trading volumes have shrunk. Traders may have decided to cash out of DFM's shares as they expect its top line in the second quarter to come under pressure, especially since it coincides with Ramadan.
DXB Entertainments lost 2.2 percent, as Ramadan and hot summer weather may reduce footfall at its Dubai hotels and theme parks.
In Abu Dhabi, mid- to small-sized companies weighed on the index, which fell 0.1 percent; food producer Agthia Group was down 1.8 percent.
In Qatar, banking shares which are constituents of the MSCI emerging market index were resilient with Qatar National Bank rising 1.2 percent and Masraf Al Rayan adding 0.2 percent. The index, however, dropped 0.1 percent as most other shares declined.
* The index fell 0.7 percent to 6,936 points.
* The index lost 0.8 percent to 3,364 points.
* The index fell 0.1 percent to 4,546 points.
* The index edged down 0.1 percent to 10,123 points.
* The index rebounded 1.1 percent to 12,792 points.
The index lost 0.4 percent to 6,745 points.
* The index edged up 0.1 percent to 1,310 points.
* The index edged down 0.2 percent to 5,402 points.
(Editing by Andrew Torchia and David Evans)