* Most markets edge up as sell-off fuelled by Iraq eases
* But stocks with direct exposure continue to fall
* Zain Kuwait drags down its bourse
* Dubai's Arabtec rises after CEO's resignation
* Qatar shrugs off report of capital gains tax proposal
By Olzhas Auyezov
DUBAI, June 18 (Reuters) - Most stock markets in the Gulf rebounded on Wednesday after an Iraq-related sell-off ended, although stocks directly exposed to the country continued to suffer. Dubai's Arabtec rose after its chief executive resigned.
The gains by insurgents in Iraq triggered a run on global and regional equities earlier this week that dragged down most stocks in the Gulf. However, the selling subsided on Tuesday, and on Wednesday most bourses in the region edged up, though trading volumes were modest.
Abu Dhabi's bourse led gains, rising 0.7 percent on the back of National Bank of Abu Dhabi, which jumped 4.3 percent.
The stock was hit hard by profit-taking this month after posting sustained gains in the run-up to its inclusion, along with 18 other companies from the United Arab Emirates and Qatar, in MSCI's emerging market index at the end of May.
Saudi Arabia's index also rose 0.7 percent, buoyed by blue-chip banks, petrochemicals and developers.
Qatar's bourse added 0.6 percent, shrugging off a report by local newspaper Peninsula Qatar saying the country's advisory Shura Council was in favour of introducing taxes on capital gains and dividends for foreign investors in local stocks.
Fund managers said the report had little impact as the council's position was only a recommendation and it was up to the government whether to act on it - meaning there was no reason to expect a tax to be imposed any time soon, if at all.
Companies with direct exposure to Iraq underperformed, however. Abu Dhabi National Energy Company and Dana Gas, both of which have operations in Iraq's Kurdistan region, fell 0.9 and 1.3 percent respectively.
Zain Kuwait fell 1.5 percent and Qatar's Ooredoo was down 2.1 percent. Both mobile phone operators get a considerable part of their revenues from Iraq; Zain shares topped traded value in Kuwait, weighing on the index, which fell 1.6 percent.
Dubai construction firm Arabtec continued to dominate trading on the emirate's main bourse as, late in the session, the company said its chief executive Hasan Ismaik had resigned.
The move followed a plunge in the company's share price this month and a decision by Abu Dhabi state fund Aabar Investments, a major shareholder, to cut its stake in Arabtec to 18.94 percent from 21.57 percent.
The sale prompted speculation that there was a rift between Ismaik and Aabar management. Ismaik himself has denied that, while Aabar declined to comment. Support from Aabar is important for Arabtec's ambitious expansion plans, which are in part based on large contracts that Aabar steered its way.
Market reaction to Ismaik's departure shows investors hope the company will stabilise and there will be less volatility in the shareholder structure, said Sebastien Henin, head of asset management at The National Investor in Abu Dhabi.
However, by the late afternoon Arabtec had not issued a statement explaining the resignation or discussing its post-Ismaik strategy, so considerable uncertainty remained.
Other property-related stocks in Dubai also rose. Emaar Properties added 1.3 percent and Deyaar climbed 1.7 percent.
* The index rose 0.6 percent to 4,522 points.
* The index gained 0.7 percent to 4,781 points.
* The index added 0.6 percent to 12,591 points.
* The index rose 0.7 percent to 9,639 points.
* The index slid 1.6 percent to 6,966 points.
* The index rose 0.5 percent to 8,440 points.
* The index fell 0.4 percent to 1,439 points.
* The index rose 0.2 percent to 6,903 points. (Editing by Andrew Torchia)