* Passive funds flow into Milaha on eve of FTSE index entry
* Qatar Insurance sinks as it prepares to leave indexes
* Al Rajhi close to fair value estimates after foreign inflows
* Dubai's Emaar Properties bounces from 20-month lows
* Arabtec rises as it proposes resuming small dividend
DUBAI, March 15 (Reuters) - A surge by Qatar Navigation (Milaha) lifted the Qatari equity index on Thursday ahead of the stock's entry into FTSE indexes, while profit-taking in Al Rajhi Bank pulled down Riyadh.
Qatar's index climbed 1.1 percent as Milaha added 4.0 percent in unusually heavy trade. The stock will join FTSE's All-World and AllCap indexes after the close on Thursday, and this triggered inflows from passive funds.
Qatar Insurance, which sank 8.4 percent on Wednesday because it will be removed from some FTSE indexes at the same time, lost a further 2.0 percent and was the market's most heavily traded stock.
Saudi Arabia's index slipped 0.4 percent on continued profit-taking in a few blue chips such as Al Rajhi, down 1.4 percent to 74.0 riyals as it dropped for a third straight day.
The stock has drawn big inflows of foreign funds this year in anticipation of it eventually joining emerging market indexes, but many analysts think it is now close to being fairly valued; the median target of 14 analysts surveyed by Reuters is 77.89 riyals.
Yanbu Cement gained 2.6 percent after proposing a dividend of 1.25 riyals per share for the second half of 2017, up from 0.75 riyal for the first half although down from 2.0 riyals for the second half of 2016.
Retailer United Electronics, which had climbed 6.9 percent on Wednesday, added a further 5.7 percent to 71.0 riyals. EFG Hermes raised its target price for the stock this week to 90 riyals from 50 riyals and earlier this month, CI Capital raised its target by 38 percent to 80 riyals.
In Dubai, the index rose 1.0 percent on the back of a 2.9 percent rebound by blue chip Emaar Properties, which had been trading at 20-month lows because of the slump in the emirate's real estate market.
Builder Arabtec gained 0.9 percent after the board of the company, which is recovering from over two years of financial troubles, proposed to resume paying a cash dividend for 2017. The dividend is small, just 0.0205 dirham per share, but it is earlier than expected; in a recovery plan released in March 2017, Arabtec said it would resume dividends in 2019.
Cooling services provider Tabreed tumbled 5.2 percent as it went ex-dividend.
* The index fell 0.4 percent to 7,745 points.
* The index rose 1.0 percent to 3,197 points.
* The index gained 0.5 percent to 4,543 points.
* The index climbed 1.1 percent to 8,848 points.
* The index gained 0.7 percent to 16,999 points.
* The index rose 0.2 percent to 6,760 points.
* The index fell 0.4 percent to 1,356 points.
* The index edged up 0.1 percent to 4,897 points. (Editing by Mark Potter)