MIDEAST STOCKS-Saudi continues slide after FTSE decision, rest of region mixed

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DUBAI, April 2 (Reuters) - Saudi Arabia's stock market opened lower on Monday, falling for a third straight day after FTSE Russell decided last week to upgrade the bourse to emerging market status. The rest of the region was mixed.

The Saudi index shed 0.3 percent in the first hour, which analysts attributed to profit-taking after a months-long surge preceding FTSE's decision.

The biggest contributor to the index's drop was Saudi Telecom Co, down 1.2 percent. Al Rajhi Bank, which attracted hundreds of millions of dollars of fresh foreign money earlier this year as it is expected to be a major constituent of the FTSE index, slipped 0.3 percent.

But Al Andalus Property jumped 5.8 percent after its board proposed a cash dividend of 2 riyals per share for 2017.

Most fund managers believe FTSE inclusion is a long-term positive for Saudi stocks but say many stocks are fully valued for now; Saudi telecom for example is trading at over 16 times trailing earnings. Foreign investors bought a net $301 million of stocks last week, the third highest total on record, according to exchange data released on Sunday.

The Qatari index rose for a second day, gaining 0.8 percent after Qatar Petroleum said on Saturday that foreign investors would be able to hold up to 49 percent of four affiliates. Raising foreign ownership ceilings would increase stocks' weightings in emerging market indexes.

Gains were led by Qatar National Bank and Masraf al-Rayan, which were both up 1.3 percent.

The Dubai index dropped 0.5 percent. Its biggest contributor, Emaar Properties, fell 1.4 percent amid long-standing concern about the outlook for the local real estate market.

Neighboring Abu Dhabi's index moved sideways, as did Bahrain's bourse, which largely ignored the government's announcement on Sunday that it had discovered the country's largest oilfield in decades. Details were not provided.

In Kuwait, the market was divided into three segments on Sunday as part of reforms designed by the exchange to boost liquidity and attract more foreign money: the premier market, the main market and the auction market. The index of the premier market, home to the largest and most liquid companies, fell 0.2 percent. (Writing by Katie Paul Editing by Andrew Torchia)