MIDEAST STOCKS-Qatar seen as safe haven as index hits 3-mth high

DUBAI Aug 31 (Reuters) - Qatar's index .QSI edged up to a three-month high on Tuesday, outperforming most Middle East markets as investors bet the country can best weather any shocks to the world economy.

Masraf Al Rayan MARK.QA climbed 1.4 percent, while Qatar Electricity and Water QEWC.QA and Qatar Telecom QTEL.QA (Qtel) rose 1 and 0.6 percent respectively, with the latter pair seen as attractive dividend plays.

Qatar's index gained for the 11th session in 12, rising 0.1 percent to its highest finish since May 18.

"Qatar offers lower risk than other Gulf countries, so if you want safety you should shift your investments into Qatar," said Robert Pramberger, acting head of asset management at Doha-based investment company The First Investor.

"When international markets are wobbly, like now, investors want to minimise risk and that has helped Qatar to outperform."

Qatar is lower risk, Pramberger said, because its wealth is tied to long-term gas contracts. The country's gross domestic product is forecast to grow 16.1 percent in 2010, according to a Reuters poll of analysts. [GULFPOLL1]

World stocks fell as worries the U.S. was sliding back into recession prompted flows into safe-haven assets. [MKTS/GLOB]

Dubai's index .DFMGI declined for a fifth session in six, with the bourse's lack of diversification and uncertainty over its dominant property sector spurring further selling.

Union Properties UPRO.DU fell 1.1 percent to a 10-year low and builder Arabtec ARTC.DU lost 1.2 percent.

"The problem with Dubai is the lack of diversification - it's hard for investors to find stocks that aren't correlated," said Hesham Tuffaha, Bakheet Investment Group head of research.

"Real estate dominates Dubai and this impacts index movements - even if a stock isn't related to real estate, it is likely to follow index moves."

Dubai house prices have fallen about 55 percent from 2008 peaks as over-supply and a liquidity crunch sent valuations tumbling, while government-owned developer Nakheel [NAKHD.UL] and parent Dubai World [DBWLD.UL] are negotiating with creditors to restructure multibillion dollar debts. [ID:nLDE67O1LF]

Egypt's Orascom Telecom (ORTE.CA) fell 1.5 percent to 5.29 pounds ($0.90), with investors little moved by a news report that the Algerian government was near to buying the firm's Djezzy unit.

Algeria blocked Orascom from selling the lucrative operator to South Africa's MTN (MTNJ.J) in April, hurting the Egyptian firm's share price. In May, Orascom said it would enter talks to sell the unit to the government, but progress has been slow.

"No rumours will affect the stock -- investors are tired of hearing false rumours back and forth," said Amr El Feky of Cairo Capital Securities, adding he expects the stock to trade between 5.1 and 5.6 pounds until an official announcement on Djezzy.

Saudi Arabia's index reversed early losses to end higher as Riyad Bank 1010.SE climbed 4.6 percent and Samba Financial Group 1090.SE added 2.9 percent.

"There's no news to push these stocks higher and so it looks like some share price manipulation to boost portfolio valuations at the end of the month," said a Riyadh-based trader who asked not to be identified.

TUESDAY'S HIGHLIGHTS

QATAR

* The benchmark .QSI rose 0.1 percent to 7,226 points.

DUBAI

* The benchmark .DFMGI fell 0.5 percent to 1,484 points.

EGYPT

* The measure .EGX30 fell 0.9 percent to 6,408 points.

SAUDI ARABIA

* The index .TASI rose 0.6 percent to 6,106 points

ABU DHABI

* The index .ADI slips 0.03 percent to 2,499 points.

KUWAIT

* The index .KWSE climbed 0.3 percent to 6,689 points.

OMAN

* The index .MSI eased 0.1 percent to 6,257 points.

BAHRAIN

* The index .BAX fell 0.3 percent to 1,419 points.

(Additional reporting by Shaimaa Fayed in Cairo; Editing by Firouz Sedarat)