* Saudi's Metlife up but far off high after regulatory news
* Merger talks fails to boost Arabian Cement
* PetroRabigh down on facility closure for maintenance
* Rumour says Omantel could increase Zain stake
* Qatar falls to another five-year low
DUBAI, Oct 5 (Reuters) - Most Gulf stock markets fell on Thursday, with Qatar falling for a third straight session to a new five-year low, but shares in Kuwaiti telecommunications operator Zain jumped on a rumour that Oman Telecommunications might expand its stake in the firm.
The Saudi index lost 0.4 percent, with the banking sector, which had been relatively robust this week, falling back. National Commercial Bank lost 1.2 percent.
Saudi-based insurer Metlife AIG ANB Cooperative Insurance rose 1.1 percent to 20.04 riyals in its heaviest trade since May 2016, but closed well below its intra-day high of 21.80 riyals.
The company announced that the industry regulator had approved the opening of three new outlets in Riyadh, Jeddah and Khobar. Metlife said the positive financial impact would be reflected in its fourth-quarter results.
Arabian Cement rose in early trade after announcing that it is in initial talks with privately held Safwa Cement for a potential merger, but it closed 0.1 percent lower.
This would be the first merger in the sector in Saudi Arabia, according to NCB Capital. The sector has been hit by a demand slowdown and a slump in profits over the last two years. Arabian Cement has an annual production capacity of 5.4 million tonnes while Safwa produces 3.35 million tonnes.
"The combined capacity of both players would make the potential new entity the second-largest player in the market by overall installed capacity after Southern Cement," said NCB Capital in a note.
Rabigh Refining and Petrochemical, a joint venture between state-owned Saudi Aramco and Japan's Sumitomo, lost 0.9 percent after saying it had shut its vacuum gas oil unit for 32 days as part of scheduled maintenance.
In Kuwait, Zain surged 3.4 percent while Omantel rose 1.1 percent. Regional television network Al Arabiya quoted a securities analyst as saying there were rumours that Omantel was in talks with Kuwait's Al Kharafi Group to buy a further 12 percent stake in Zain. In August, Omantel bought 9.84 percent of the company. The companies made no statement.
Qatar's index, which closed at a five-year low on Wednesday, fell a further 0.3 percent. Banking and commodity-linked shares were again the main drags. Commercial Bank lost 0.6 percent and Gulf International Services fell 1.5 percent.
The Dubai index gave up gains made earlier in the day to close 0.2 percent down. Deyaar Development, which had jumped 3.1 percent the previous day, lost 1.6 percent.
In Abu Dhabi, the index dropped 0.4 percent as First Abu Dhabi Bank lost 1.5 percent.
Egypt's market was closed for a public holiday.
* The index fell 0.4 percent to 7,259 points.
* The index edged down 0.2 percent to 3,591 points.
* The index fell 0.4 percent to 4,414 points.
* The index declined 0.3 percent to 8,132 points.
* The index lost 0.5 percent to 6,662 points.
* The index was flat at 1,274 points.
* The index added 0.1 percent to 5,213 points. (Editing by Andrew Torchia)