* Abu Dhabi banks rally on Q2 earnings growth
* Dubai reaches 56-month high
* Some expect correction for UAE but no clear sign on charts
* Egypt's CBI lifts index after OCI's departure
* Qatar's Barwa Real Estate sinks after H1 profit slump
By Nadia Saleem
DUBAI, Aug 1 (Reuters) - Abu Dhabi's bourse climbed to a new 58-month high on Thursday, backed by a bullish outlook on banks, while most other regional markets also gained.
Shares in Abu Dhabi's First Gulf Bank jumped 4.9 percent, National Bank of Abu Dhabi rose 1.9 percent and Invest Bank gained 5.7 percent.
Many of the emirate's banks have in the last two weeks reported strong earnings growth for the second quarter, with some beating analysts' forecasts, confirming they are benefiting from an economic recovery.
"People are still positive and expecting more growth in results for the coming quarters," said Nabil Al Rantisi, managing director at MENA Corp brokerage. "Participation has picked up from all sides, retail and institutional."
Abu Dhabi's measure rose 2.0 percent to close at 3,923 points, its highest since September 2008.
Because Abu Dhabi and Dubai have risen to rapidly this year - Abu Dhabi is up 49 percent year-to-date - some analysts are talking about a looming correction, though there is no clear technical sign of one starting.
"The index is searching for a major top - then a correction will start, which will last for at least three to four months," said Feras Al Zghaibi, financial markets strategist at MENA Corp. The market could pull back by 400 to 600 points at a minimum, and any break below major support of 3,834 points would trigger major stop-loss orders on short-term charts, he added.
In Dubai, the index added 0.2 percent to close at a 56-month high. District cooling firm Tabreed gained 0.5 percent after it reported a 37 percent increase in second-quarter net profit.
In Egypt, the rebalancing of the main index after the removal of Orascom Construction Industries (OCI), previously the market's biggest stock, brought in foreign buyers of blue chips.
Commercial International Bank (CIB), the new leader by market value, rose 3.9 percent to hit a two-month high. Orascom Telecom climbed 0.5 percent.
"The buying was all from index trackers after the rebalancing but it's not sustainable," said Ahmed Abu Taleb, assistant vice-president of brokerage at Pharos Securities.
Dutch-listed fertiliser firm OCI NV acquired more than 97 percent of OCI at the end of its tender offer earlier this week. The exchange drops stocks from its index that have less than 5 percent of free float listed.
Foreign investors were net buyers of Egyptian stocks on Thursday, according to bourse date. Local and regional investors were net sellers ahead of possible action by the army against the Muslim Brotherhood and supporters of ousted President Mohamed Mursi, who have set up camps in Cairo.
The Egyptian Interior Ministry offered protestors a "safe exit" a day after the country's army-backed government said it would move soon to disperse thousands of Mursi supporters.
"The political situation is unresolved. Casualties are expected as a result of any confrontation and that's the biggest risk and overhang on the market," Taleb added.
He said foreign investors continued to face problems repatriating funds because of a dollar shortage in the country.
Cairo's benchmark rose 1.0 percent to 5,376 points; it has been trapped in a tight range for the last three weeks as it faces major technical resistance around 5,450 points, which capped rallies in May and July.
In Doha, Barwa Real Estate fell 2.9 percent to a two-month low after the developer reported a slump in first-half earnings.
Qatar's largest listed property developer posted a net profit of 199.2 million riyals ($54.7 million) for the six months to June 30, compared with 593.7 million riyals in the corresponding period of 2012.
The index ended nearly flat.
Elsewhere, Saudi Arabia's bourse eased 0.06 percent, coming off Wednesday's 16-month high.
Shares did not react significantly to the stock exchange's announcement that it had appointed Adel Saleh al-Ghamdi as its chief executive, replacing Abdullah Alsuweilmy.
The appointment of al-Ghamdi, who was general manager in the corporate finance and issuance division of the Saudi Capital Market Authority, may be part of preparations for the eventual opening of the market to direct foreign investment, though officials have not set a date for this reform and it has been under study for years.
* The index rose 2.0 percent to 3,923 points.
* The index gained 0.2 percent to 2,595 points.
* The index advanced 1.0 percent to 5,376 points.
* The index eased 0.06 percent to 7,911 points.
* The index edged up 0.02 percent to 9,707 points.
* The index gained 0.2 percent to 8,088 points.
* The index climbed 0.2 percent to 6,658 points.
* The index gained 0.3 percent to 1,199 points. (Editing by Andrew Torchia)