By Shakeel Ahmad
May 29 (Reuters) - Saudi Arabian stocks dropped on Wednesday as falling oil prices and weak global sentiment pulled down banking shares on the market's first of trading as a member of the MSCI emerging markets index.
Some investors also cashed in their holdings ahead of the long Eid Holiday in the next week.
Thirty Saudi-listed securities were added to MSCI's index after the close of trading on Tuesday, representing an aggregate weight of 1.42% in the Emerging Markets Index.
Saudi's index .TASI fell 1.6%, with Riyad Bank 1010.SE down 3.6% and Banque Saudi Fransi 1050.SE sliding 5.4%.
Oil prices fell nearly 3% on Wednesday as China signaled it would use rare earths in its trade war with the United States, stoking concerns that an ongoing stand-off could hurt crude demand.
"Sentiment is weak on geopolitical and global economic noise," said a Saudi-based analyst at one brokerage.
The index eased back from a seven-month high, driven by foreign investors stepping in during the extended closing auction in the last session.
"Yesterday was the MSCI event, whereby Saudi stocks were included in MSCI EM Index leading to significant traded value in the auction period and increase in index levels," said Devassy Pritish, head of equity research at Al Rajhi Capital.
"So, the decline today is related to cooling off of this event," Pritish added.
The Abu Dhabi index .ADI rose 1.6%, led by the United Arab Emirates' largest lender, First Abu Dhabi Bank FAB.AD, which rebounded 3.3% to 14.3 dirhams.
The stock hit a record high of 17 dirhams in the second half of April following a foreign ownership limit hike to 40% from 25%.
But the lender has seen cooling since then, under pressure from the global trade dispute and geopolitical worries, and as MSCI retained its foreign inclusion factor at 25%, disregarding the foreign ownership limit rise.
Qatar's index .QSI closed 0.4% higher, as gains in banks offset losses in other sectors. Qatar National Bank QNBK.QA was up 3.8% while Qatar Commercial Bank COMB.QA climbed 3.4%.
In Dubai, the index .DFMGI fell 0.3%, mostly pulled down by Emaar Group companies. Blue-chip developer Emaar Properties EMAR.DU shed 1.1%, while its units Emaar Malls EMAA.DU and Emaar Development EMAARDEV.DU fell 2.1% and 2.3% respectively.
Egypt's blue-chip index .EGX30 was down 0.4%, with El Sewedy Electric SWDY.CA losing 2.8% after on Tuesday reporting a near 30% drop in the first-quarter profit.
The index .TASI fell 1.6% to 8,414 points
The index .ADI was up 1.6% to 4,866 points
The index .DFMGI fell 0.3% to 2,600 points
The index .QSI rose 0.4% to 9,932 points
The index .EGX30 was down 0.4% at 13,974 points
The index .BAX gained 0.2% to 1,430 points
The index .MSI was up 0.6% at 3,941 points
The index .BKP rose 0.8% to 6,205 points
(Reporting by Shakeel Ahmad in Bengaluru Editing by David Holmes)
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