* Egypt down as local funds exit but foreigners net buyers
* El Sewedy drops despite announcing new project award
* Petrochemical shares weigh on Saudi as Brent near $56
* Dubai breaks over technical resistance
* Emirati financial, insurance shares gain on merger speculation
By Celine Aswad
DUBAI, Jan 9 (Reuters) - Egypt's main stock index corrected on Monday as local traders booked profits and Gulf markets diverged with United Arab Emirates markets outperforming as traders focused on financial shares while a retreat in oil prices weighed on Saudi Arabian petrochemical producers.
Cairo's main index fell 0.9 percent, snapping four straight sessions of gains. Local institutions were net sellers of Egyptian shares by a large margin, while foreign funds were net buyers, bourse data showed.
Many analysts believe this is a normal correction, not uncommon after a market has climbed 45 percent since the floatation of the currency on Nov. 3 last year.
Arab Cotton Ginning was the worst performer on the EGX30, dropping 4.0 percent.
El Sewedy Electric lost 2.0 percent. On Monday it announced that a subsidiary had won a bid for an engineering and construction project with the state owned electricity company. The value and start date of the project was not disclosed.
Analysts at Cairo's Naeem Brokerage believe this project will have little impact on the valuation of Sewedy because they have already factored new projects valued at 6 billion Egyptian pounds for 2017.
Riyadh's index lost a further 0.8 percent, taking its losses since the start of the year to 1.8 percent. Oil-derivative producers weighed on market performance as Brent crude futures retreated to around $56 a barrel. Rabigh Refining and Petrochemical fell 2.1 percent.
But Jarir Marketing added 0.2 percent after the electronics and bookstore retailer reported a 3.5 percent increase in fourth-quarter net profit on Monday as sales of electronic goods rose. Net profit came in at 215.3 million riyals ($57.4 million) in line with the 203.0 million riyals forecast by analysts.
Analysts at Al Rajhi Capital said in a note that the strong revenue growth implies that same store sales growth is the best in seven quarters.
"Jarir's Q4 revenue growth at 17.7 percent year-on-year was much ahead of our flattish estimate, driven by higher sales of electronics, mainly smartphones according to the company's announcement. iPhone 7 sales in the Kingdom commenced in Q4 and is likely to have played a major role in driving smartphone sales."
Dubai's index closed 0.8 percent to 3,721 points in a second session of heavy trade, breaking above technical resistance at the mid-December peak of 3,659 points, facing next resistance at the October 2015 peak of 3,740 points.
The top gainers were smaller companies in finance and insurance; Ajman Bank jumped 7.8 percent.
Some traders have been speculating there may be consolidation in the finance industry following the merger of National Bank of Abu Dhabi (NBAD) and First Gulf Bank , which is set to complete this year.
Shares in NBAD climbed 2.4 percent, helping the Abu Dhabi index finish 0.6 percent higher. Another lender which traders expect to merge in the coming year, Union National Bank added 2.4 percent.
Qatar's index, however, lost 0.2 percent as investors cashed out of some of the recent gains. Islamic bank Masraf Al Rayan fell 1.5 percent.
* The index fell 0.8 percent to 7,082 points.
* The index rose 0.8 percent to 3,721 points.
* The index added 0.6 percent to 4,664 points.
* The index inched down 0.2 percent to 10,702 points.
* The index lost 0.9 percent to 12,781 points.
* The index rose 0.9 percent to 5,951 points.
* The index added 0.6 percent to 5,793 points.
* The index lost 0.3 percent to 1,206 points.