MIDEAST STOCKS-Egypt up on Orascom Telecom return hopes, Gulf mixed

CAIRO/DUBAI Jan 11 (Reuters) - Egypt's main index reached a three-week high on Wednesday on hopes Orascom Telecom will pull the market higher when it resumes trade following a tentative deal to resolve a dispute over its Algerian unit Djezzy.

Markets were mixed in the Gulf, with Qatar National Bank rebounding a day after investor disappointment at the proposed dividend knocked its shares down the most since late-2009.

Investors in Egypt targeted heavyweight stocks hit hardest in the market's steep decline last year, with property developer Talaat Moustafa Group up 5.4 percent and Ezz Steel gaining 5.8 percent.

A long-running row over Djezzy's fate has weighed on Orascom's share price, but on Monday Vimpelcom, which acquired most of Orascom in April, said it had agreed to sell a majority stake in the unit to Algeria's government pending an agreement on price.

OT's local shares have been suspended since Nov. 24 pending its split into two listed companies - a second listing, Orascom Telecom Media and Technology, will include the assets excluded from Vimpelcom's takeover - but the firm's global depositary receipts have gained 18 percent this week.

"The rise in the GDRs is all because of Djezzy. If the stocks start trading in the next couple of days they will catch up with the GDRs. Both should rise by at least 25 percent," said Ahmed Abu Taleb, foreign sales trader at Pharos Securities.

If Orascom's two listings were to gain 10 percent, it would lift Cairo's main share index by 1 percent, he added.

Both stocks will start trading a day after an official announcement on the split is published in newspapers. No date has yet been fixed.

Cairo's benchmark climbed 0.8 percent to its highest finish since Dec. 19.

In Qatar, QNB rose 1.7 percent, after dropping 5.2 percent on Tuesday, and led bank stocks higher.

Doha Bank climbed 3.1 percent and Commercial Bank of Qatar added 1.1 percent.

Saudi Arabia's Bank Aljazira rose 0.6 percent to a six-month high after the lender's fourth-quarter profit beat forecasts.

It reported a fourth-quarter profit of 110 million riyals ($29.3 million) as it swung from a loss a year earlier.

"The management attributed the growth in net income to increased total operating income and lower operating expenses," a note from NCB Capital said.

"From lower operating expenses, we believe lower net provisions are the key reason behind the net income increase."

WEDNESDAY'S HIGHLIGHTS

EGYPT

* The index rose 0.8 percent to 3,766 points.

QATAR

* The benchmark climbed 1 percent to 8,711 points.

SAUDI ARABIA

* The benchmark rose 0.2 percent to 6,486 points.

KUWAIT

* The measure eased 0.06 percent to 5,717 points.

DUBAI

* The index fell 0.5 percent to 1,334 points.

ABU DHABI

* The benchmark rose 0.1 percent to 2,365 points.

OMAN

* The index inched down 0.08 percent to 5,710 points.

BAHRAIN

* The measure lost 0.5 percent to 1,129 points. (Writing by Matt Smith; Editing by Firouz Sedarat)