MIDEAST STOCKS-Markets mixed, Syria concern prevents major rebounds
* Some retail buyers return but momentum fails to build
* Dubai loses 6.6 percent over this week
* Saudi comes off high, some valuations called rich
* Egypt gains modestly after cabinet sets spending plan
* Doubts over whether plan will use Gulf money effectively
By Nadia Saleem
DUBAI, Aug 29 (Reuters) - Middle East stock markets were mixed on Thursday as heavy selling related to the Syrian war faded, but continued uncertainty over how and when the United States might strike Syria blocked solid rebounds.
President Barack Obama told Americans that a military strike against Syria would be in their interest, but there were signs that any action would be delayed at least several days while the case was laid out to U.S. and British lawmakers.
This encouraged some Gulf retail investors to buy stocks on Thursday as margin calls eased, but the markets' rebounds during the day lacked momentum.
"We had a lot of speculation and hot retail money in the market and they've been caught be the news and reacted very promptly," said Sebastien Henin, portfolio manager at The National Investor in Abu Dhabi.
"If you analyse U.S. involvement, it will most probably be limited in terms of timing and geography and shouldn't impact the Gulf region much."
This week's losses have taken some of the froth off Gulf markets; Amer Khan, fund manager at Shuaa Asset Management, estimated Dubai was now trading at 12.9 times 2013 earnings, not prohibitively high for a growth market.
But Asim Bukhtiar, head of research at Saudi Arabia's Riyad Capital, said: "We see a bit of risk until the geopolitical situation gets resolved in coming days - we expect volatility to continue in the market and it would be safer to stay on the sidelines."
Dubai's index gained 0.3 percent, trimming this week's losses to 6.6 percent and leaving the market up about 55 percent year-to-date. Abu Dhabi eased 0.07 percent, down 5.4 percent on the week.
In Qatar, the benchmark rose 0.8 percent, snapping four sessions of declines from a five-year high. It lost 4.7 percent this week.
Saudi Arabia's measure was little changed; it rose more than 1.0 percent in early trade but then gave up most of those gains. Despite this week's losses of 5.2 percent, many Saudi valuations remain rich, especially in sectors such as banks and the retail sector, Bukhtiar said.
In Kuwait, retail traders sold small-cap shares, which accounted for most trading volume. The index lost 1.0 percent and was down 5.8 percent for the week.
"People are off-loading shares - the big players are pressuring smaller stocks to pick them up later from lower levels," said Fouad Darwish, head of brokerage services at Global Investment House.
But he added, "Fundamentally, it's the best condition that the market has been in for years." Kuwait is up 28.6 percent year-to-date, backed by improving corporate earnings and increasing anticipation of progress on long-delayed infrastructure building plans.
Cairo's main benchmark climbed 0.8 percent to 5,268 points, snapping a three-session losing streak. The market gained modest support from the cabinet's approval of 22.3 billion Egyptian pounds ($3.2 billion) of spending on investment projects over the coming 10 months.
Capital Economics said the spending plan might help the economy in the near term, but noted there were implementation risks as the money might get diverted to welfare handouts and state salaries. It said it might be more effective to ease foreign exchange restrictions on private sector importers rather than spend money through the public sector.
It added, "With the package being funded by Gulf aid, over the longer term it could actually take the country further away from making much-needed reforms to improve the business environment."
Technically, the Egyptian market remains bearish after its 2.1 percent drop on Wednesday triggered a head and shoulders pattern formed by the peaks since July. The height of the pattern points down to the 5,000-point area; chart resistance is around 5,300 points, the lows in late July and mid-August.
* The index gained 0.3 percent to 2,523 points.
* The index eased 0.07 percent to 3,735 points.
* The index dropped 1.0 percent to 7,633 points.
* The index gained 0.2 percent to 7,767 points.
* The index climbed 0.8 percent to 9,619 points.
* The index advanced 0.8 percent to 5,268 points.
* The index rose 0.8 percent to 6,692 points.
* The index slipped 0.1 percent to 1,188 points.
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