* Qatar rebounds early on but soon falls back
* Stocks related to foreign trade are hit hard
* Saudi petchems hit after Qatar crisis pulls down oil
* Drake & Scull continue rebound in Dubai
* Egypt's Remco Tourism leaps on sales plan
By Andrew Torchia
DUBAI, June 6 Most Gulf stock markets fell on
Tuesday as the diplomatic crisis surrounding Qatar worried
investors, while Egypt's equities index climbed for an 11th
straight day to a fresh record high.
Qatar's index fell 1.6 percent to 9,059 points, its
lowest close since January 2016, in heavy trade. It had plunged
7.3 percent on Monday after Saudi Arabia, the United Arab
Emirates and Bahrain cut diplomatic and transport ties with
Qatar, accusing it of backing terrorism.
The Qatari market rebounded more than 3 percent in early
trade on Tuesday, buoyed by hopes that a Kuwaiti mediation
effort might succeed. Some fund managers also said they expected
Qatari state-linked funds to support the market.
But the rebound was short-lived. In contrast to Monday, when
selling of stocks was indiscriminate, many of the biggest losers
on Tuesday were related to Qatar's foreign trade, which could
decline or face higher costs due to the sanctions.
Logistics company Gulf Warehousing sank 8.0
percent and Qatari German Medical Devices, which has
done considerable business in Saudi Arabia, tumbled 8.8 percent.
The biggest lender, Qatar National Bank, slipped
1.3 percent. Although Qatar's huge financial reserves mean it
can probably avoid a crippling crisis, many parts of its
economy, from tourism to banks which obtain funding from
elsewhere in the Gulf, may be hit.
Most other Gulf bourses dropped moderately. Although Gulf
economies have little exposure to Qatar, foreign portfolio
investors may at least temporarily become more cautious towards
the whole region; the Saudi riyal edged down in the one-year
forwards market on Tuesday and regional bonds slipped.
The Saudi Arabian, UAE and Bahraini central banks have not
yet clarified how they want commercial banks in their countries
to handle business ties with Qatar, which involve substantial
cross-border lending, deposits and syndicated loans.
If the commercial banks are advised to get rid of their
Qatari assets in a short timeframe, or if authorities act
against Qatari banking assets in their jurisdictions, that could
provoke retaliation by Doha and turmoil in the Gulf banking and
The Saudi stock index, which has been buoyed in
recent days by expectations that international index compiler
MSCI will start on June 20 a process towards upgrading Riyadh to
emerging market status, fell 0.5 percent in active trade on
Petrochemical stocks were particularly hard hit after oil
prices dropped on concern that the Qatar crisis could disrupt an
agreement among global oil producers to prop up prices. Saudi
Basic Industries lost 1.4 percent.
Dubai's index edged up 0.2 percent as builder Drake
& Scull, which has been rebounding from year-lows for
the past week, added 1.1 percent to 0.38 dirham in its heaviest
trade for almost four months. But it came well off the day's
high of 0.409 dirham.
In Egypt, the index rose 0.8 percent on the back of
strong blue-chip property developers, although in the broad
market, gainers roughly equalled losers.
Remco Tourism Villages jumped 9.9 percent after
saying it intended to finish marketing all units of its Stella
Heights project before year-end for about 2.5 billion Egyptian
pounds ($139 million).
* The index fell 0.5 percent to 6,933 points.
* The index edged up 0.2 percent to 3,322 points.
* The index fell 0.5 percent to 4,460 points.
* The index dropped 1.6 percent to 9,059 points.
* The index rose 0.8 percent to 13,627 points.
* The index edged down 0.03 percent to 6,801 points.
* The index edged down 0.1 percent to 1,325 points.
* The index edged up 0.02 percent to 5,407 points.
(Editing by Pritha Sarkar)