* Dubai trading volume falls, market ends well off low
* Some see pull-back as healthy
* Saudi petchem index recovers to close higher
* Qatar falls on local selling; foreigners are buyers
* Egypt drops marginally after political violence
By Nadia Saleem
DUBAI, Jan 26 (Reuters) - Shares in Dubai and Abu Dhabi tumbled on Sunday, leading a region-wide decline following a sharp sell-off in U.S. and emerging markets on fears of slowing growth in China and reduced support from U.S. monetary policy.
Dubai's bourse, which has been driven to hefty gains by local retail investors, fell 2.2 percent - recording its biggest one-day loss in more than two months as it came off Thursday's five-year high.
Trading volumes were lower than they were during last week's gains and the market closed well above the day's low, suggesting buyers are ready to step in on dips.
Neighbouring Abu Dhabi's measure lost 1.8 percent, also retreating from a five-year high.
Gulf economies are mostly insulated from a pull-back in emerging markets and currency risks there, because of their state budget and current account surpluses, as well as continued government spending on infrastructure projects.
"The market was registering higher highs and in a way, this was a good trigger for some profit-taking, which is healthy," Rami Sidani, Schroders Middle East head of investment, said of Dubai.
Small-cap shares had led gains in recent sessions, increasing the potential for a sharp pull-back.
"We are seeing buyers who have been waiting on the side for some correction - this will continue to be the case because the local fundamentals are robust and economies are resilient," Sidani added.
In Saudi Arabia, the index fell 0.4 percent, coming off Thursday's five-year high. Petrochemical shares were initially hardest hit but then recovered and the sector's index closed up 0.3 percent. China is a major market for Saudi petrochemical products, which depend on global demand.
"People are taking a little bit of profit off the table and being cautious - but there is an indication liquidity has re-entered the market," said John Sfakianakis, chief investment strategist at Saudi investment firm MASIC.
"There is bullishness in the market and dips offer opportunities. The China story (suggesting its economy is weakening) is not so well-founded - and even if it slows, I don't see global growth taking a dive."
In Qatar, the benchmark slipped 0.4 percent to trim January's gains to 8.9 percent. Qatari individuals and institutional investors were net sellers, bourse data showed, while foreign investors were buyers.
In Egypt, the benchmark index fell 0.2 percent, retreating from a three-year high after a weekend of violence heightened fears of escalating unrest in coming days.
On Saturday, the third anniversary of the uprising that toppled Hosni Mubarak, clashes between supporters and opponents of the new political order killed 49 people.
"I'm not very optimistic about how things will go over the coming days - the market is due for a correction," said Islam Batrawy, Cairo-based head of MENA equity sales at NBK Capital.
"The official death toll is rising and this is alarming - we'll probably see further escalation. We might be seeing just the start of this."
* The index dropped 2.2 percent to 3,734 points.
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* The index declined 0.4 percent to 8,736 points.
* The index slipped 0.4 percent to 11,299 points.
* The index slipped 0.2 percent to 7,218 points.
* The index declined 0.8 percent to 7,146 points.
* The index ticked up 0.1 percent to 7,785 points.
* The index slipped 0.2 percent to 1,274 points.