* Saudi market had surged before FTSE decision
* Profit-taking is moderate, little downside seen
* Other Gulf bourses may get some relief from fund outflows
* Kuwait blue chips climb ahead of FTSE index inclusion
* Aramex surges in Dubai after positive analyst report
RIYADH, March 29 (Reuters) - Saudi Arabia's stock market fell back because of moderate profit-taking on Thursday after index compiler FTSE Russell decied to upgrade Riyadh to emerging market status, a move likely to draw billions of dollars of new foreign money.
Most other Gulf markets gained, after being being depressed in recent weeks by funds flowing to Riyadh in anticipation of a positive decision by FTSE.
Inclusion in FTSE's emerging market index is expected to put Saudi Arabia on the map for many international fund managers. If rival index compiler MSCI also decides in June to upgrade Riyadh, over $30 billion could flow in over the next couple of years.
But FTSE inclusion will only take effect in stages between March and December 2019; only then will passive funds linked to the index begin flowing in. Also, the Saudi market had already risen over 9 percent this year in anticipation of FTSE's decision, leaving stocks vulnerable to profit-taking.
As a result, the Saudi stock index fell 0.4 percent on Thursday as blue chips languished. Saudi Basic Industries dropped 0.8 percent and Saudi Arabian Mining Co lost 1.2 percent, although Al Rajhi Bank rose 0.5 percent.
A monthly Reuters poll of Middle East fund managers published on Thursday found 46 percent expected to raise their Saudi equity allocations over the next three months and 23 percent to reduce them.
That balance was significantly below the result of the previous two polls, in which 69 percent expected to raise allocations to Saudi Arabia and none to cut them.
In Kuwait, which FTSE will upgrade to emerging market status in September, the index was 0.5 percent higher on the back of several top blue chips.
National Bank of Kuwait climbed 2.2 percent, Zain was up 1.9 percent and Agility added 1.1 percent. All three are on an indicative list of 10 stocks which are likely to join FTSE's emerging market index. FTSE published the list on Wednesday and will release a final list on Aug. 24.
Qatar's index gained 0.2 percent as Doha Insurance added 4.7 percent, although Qatar First Bank dropped 4.6 percent after reporting that its annual net loss widened slightly from the previous year.
In Dubai, the index rose 0.6 percent in a broad-based rally, with gainers outnumbering losers by 26 to seven. Blue chip Emaar Properties bounced 1.4 percent after trading near 22-month lows in recent days.
Courier Aramex surged 3.3 percent to 4.40 dirhams. In a report released on Thursday, AlphaMena raised its assessment of the stock to "buy" with a six-month price target of 5.30 dirhams, citing the company's fast-growing International Express segment and its acquisitions.
A 2.6 percent climb by First Abu Dhabi Bank, that emirate's biggest lender, helped to lift the Abu Dhabi index 0.8 percent.
Egypt's index gained 0.8 percent as real estate firm Palm Hills rose sharply for a second straight day, last trading up 9.8 percent. It has been buoyed by a presidential decree this month that reclassified agricultural land along the Cairo-Alexandria Desert Road for urban communities.
The Reuters poll found 54 percent of fund managers expected to raise their equity allocations to Egypt and none to reduce them - the most positive balance towards that country since February 2014. They cited an improving macroeconomic outlook and political stability, with elections this week set to give President Abdel Fattah al-Sisi a second term.
* The index fell 0.4 percent to 7,871 points.
* The index rose 0.6 percent to 3,109 points.
* The index gained 0.8 percent to 4,585 points.
* The index added 0.2 percent to 8,574 points.
* The index climbed 0.8 percent to 17,450 points.
* The index gained 0.5 percent to 6,633 points.
* The index rose 0.3 percent to 1,318 points.
* The index was flat at 4,774 points. (Editing by Andrew Roche)