* Saudi Arabia, Egypt hit fresh six-year highs
* Saudi banks rise after Fed interest rate comment
* Market shrugs off restrictive foreign ownership rules
* Egyptian stocks up on strong Q2 results
* Qatar retreats from record high
By Olzhas Auyezov
DUBAI, Aug 24 (Reuters) - Saudi Arabia's banking stocks, poised to benefit from the expected increase of interest rates in the United States, continued to boost the kingdom's market on Sunday, while property developers buoyed Egypt's bourse.
The main Saudi index rose 1.6 percent to 10,903 points, a level last seen in January 2008. Alinma Bank was the main support, surging 9.7 percent, while shares in Bank Albilad jumped 7.7 percent.
Analysts say banks in Saudi Arabia, whose currency is pegged to the dollar, are likely to benefit from the eventual increase in U.S. interest rates, which will widen their margins. Federal Reserve Chair Janet Yellen indicated on Friday that the Fed might have to raise rates sooner and more quickly than expected.
According to Naveed Ahmed, investment director at Gulf Finance House in Bahrain, Saudi bank shares are also more liquid compared to stocks in many other sectors, and are thus better positioned to capture the positive momentum from the planned opening of the market to direct foreign investment.
Saudi Arabia's index has risen 12 percent since the Capital Market Authority said in late July that it would allow direct foreign ownership of local stocks early next year.
On Thursday, the CMA published draft regulations which would cap total foreign ownership at 10 percent of the market's value and restrict foreign holdings of individual stocks. Although some foreign fund managers criticised the rules as restrictive, local market players had largely expected the regulator to take such a conservative approach.
However, some analysts believe the current rally is now becoming stretched.
"I believe this rally won't last for long," said Turki Fadaak, research and advisory manager at AlBilad Capital in Riyadh.
"The banking index will probably remain flat within the next few days with some profit-taking in the overpriced stocks."
Egypt's bourse was the second-best performer in the region on Sunday, rising 1.3 percent to a fresh six-year closing high on the back of blue-chip property and financial sector stocks.
Developer Talaat Moustafa was the main support, jumping 5.0 percent to 10.80 pounds. Naeem Brokerage last week raised its target price for the stock to 13.24 pounds, citing strong second-quarter results.
Shares in brokerage Pioneers Holding jumped 3.2 percent. Last Wednesday, the firm reported a 55 percent rise in second-quarter net profit.
Dubai's property stocks also rose, helping the emirate's index gain 1.1 percent. Developers Emaar Properties and Union Properties added 0.5 and 3.7 percent respectively. Shares in builder Arabtec jumped 3.8 percent.
"What's happening to Arabtec is still to do with the speculation on who will buy the stake from (former chief executive) Hasan Ismaik," said Sanyalak Manibhandu, manager of research at NBAD Securities in Abu Dhabi.
Ismaik, who quit in June, owns a 27.90 percent stake in Arabtec and many investors hope he will sell it to a large state-owned entity such as Abu Dhabi state fund Aabar Investments, which already owns 18.94 percent of the firm.
Abu Dhabi's bourse added 0.6 percent. Shares in the emirate's largest listed developer, Aldar Properties, rose 2.1 percent after the firm said on Sunday it would lease 607 apartments to Cleveland Clinic Abu Dhabi. Aldar did not disclose the value of the deal.
Qatar's benchmark slipped 0.2 percent from Thursday's all-time closing high as shares in Islamic lenders Masraf Al Rayan and Qatar Islamic Bank fell 1.6 and 1.5 percent.
Leading conventional lender Qatar National Bank was the main support, however, gaining 1.2 percent. The stock's weight in MSCI's emerging market index will double from the end of this month.
Shares in conglomerate Industries Qatar, whose index weight will increase by the same margin, rose 0.5 percent.
* The index rose 1.6 percent to 10,903 points.
* The index rose 1.3 percent to 9,495 points.
* The index climbed 1.1 percent to 4,963 points.
* The index edged up 0.6 percent to 5,082 points.
* The index climbed 0.6 percent to 7,392 points.
* The index slipped 0.02 percent to 7,358 points.
* The index edged down 0.2 percent to 13,754 points.
* The index rose 0.2 percent to 1,485 points. (Editing by Andrew Torchia)