By Celine Aswad

DUBAI, April 16 (Reuters) - Saudi Arabia's two largest listed banks were the main drag on the index on Sunday on news that U.S. insurers have filed a lawsuit against the lenders over the Sept. 11, 2001, attacks, while real estate shares and troubled Dana Gas weighed on Abu Dhabi.

Shares of Al Rajhi Bank 1120.SE dropped 2.3 percent and, National Commercial Bank 1180.SE (NCB) lost 2.4 percent after the lawsuit was filed late on Wednesday in the U.S. District Court in Manhattan, by more than two dozen U.S. insurers affiliated with Travelers Cos TRV.N , in the latest effort to hold entities in Saudi Arabia liable for the attacks.

The two banks, and companies affiliated with Osama bin Laden's family and several charities are being sued for at least $4.2 billion.

Ten other banks also dipped, helping drag the index .TASI 1.0 percent lower.

NCB is expected to report first-quarter results on Monday.

In Abu Dhabi, shares of Dana Gas DANA.AD , dropped 4.4 percent in very high volume after the board's Thursday meeting showed the company was still under "severe" cash constraint from the unearned receivables from Egypt. In February Dana Gas said the amount owed by Egypt was $265 million as of Dec. 31, 2016.

"It seems the troubles of the gas explorer are not going to go away any time soon, and continued delayed payments and unstable dynamics in the energy sector will keep investors away from this stock for now," said a Dubai-based equities portfolio manager.

Dana's board also considered the restructuring of its Islamic bond.

Shares of real estate developers, which were the main drag on the benchmark at the end of last week, continued to weigh on the index as investors cashed out on disappointment over the softening of property prices in the emirate in the first quarter.

Average sales prices of apartments fell 1 percent and villa prices dropped 9 percent in the three months ending March 31 compared with the last quarter of 2016, according to a report by property consultants Chestertons.

Shares of the largest listed developer Aldar Properties ALDR.AD fell 2.7 percent and are now down 5.3 percent since last Sunday.

The index .ADI fell 0.6 percent.

Elsewhere, shares of National Bank of Kuwait NBKK.KW rose 1.5 percent after reporting an 8.1 percent rise in first quarter net profit to 85.4 million dinars ($280.78 million), slightly above two analysts' estimates of 83.3 million dinars and 84.0 million dinars.

The bank attributed the rise in net profit to higher net interest income and income from Islamic financing as a result of strong growth in business volumes. urn:newsml:reuters.com:*:nL8N1HO03X

The index on which it trades .KWSE , however, declined 0.6 percent. Kuwait Projects Company KPRO.KW dropped 3.5 percent.

Dubai's index .DFMGI extended Thursday's 0.9 percent decline and dropped 1.6 percent, its largest single day decline since Feb. 13, as 32 shares retreated and only two rose.

Shares of construction-related companies slumped; Arabtec ARTC.DU , the most traded share of the day, sank 9.7 percent while shares of Drake & Scull DSI.DU retreated 7.3 percent.

Most foreign fund managers were absent from the session on Sunday because of the Easter holiday.

Egypt's bourse was closed for Easter Sunday.





SUNDAY'S HIGHLIGHTS



SAUDI ARABIA



* The index .TASI fell 1.0 percent to 7,005 points.



DUBAI



* The index .DFMGI retreated 1.6 percent to 3,453 points.



ABU DHABI



* The index .ADI declined 0.6 percent to 4,489 points.



QATAR



* The index .QSI edged down 0.2 percent to 10,431 points.



KUWAIT



* The index .KWSE fell 0.6 percent to 6,969 points.



OMAN



* The index .MSI edged down 0.4 percent to 5,551 points.



BAHRAIN



* The index .BAX fell 0.9 percent to 1,345 points.

($1 = 3.6730 UAE dirham) (Editing by Alison Williams) ((celine.aswad@thomsonreuters.com)(+9715 6224 7653)(Reuters Messaging: celine.aswad.thomsonreuters.com@reuters.net))