DUBAI - Saudi Arabia's stock index fell on Monday on rumours that index compiler FTSE might not upgrade Riyadh to emerging-market status as quickly as hoped, while Qatar notched up its fifth straight session of gains.

At the end of the business day on Sept. 29, FTSE will announce its decision on whether to include Saudi Arabia in its secondary emerging market index.

For several weeks the market had been pricing in a strong chance of an upgrade. Analysts have predicted Saudi Arabia could see around $3.2 billion to $3.7 billion of passive fund inflows as a result, although that would not occur until the decision actually took effect, probably in late 2018.

Two fund managers told Reuters that the Saudi stock index .TASI fell 1.4 percent on Monday because investors were worried that FTSE might delay the upgrade on the grounds that foreign investors lacked enough access.

"These are rumours, which cannot be validated or verified until FTSE makes the announcement - nevertheless they were strong enough to create nervousness in the market today," said one fund manager, who declined to be named.

Shares in major companies that would probably be included in FTSE's emerging market index were some of the worst performers on Monday. Samba Financial Group 1090.SE shed 2.9 percent and dairy maker Almarai 2280.SE lost 3.0 percent.

In Abu Dhabi, Dana Gas DANA.AD sank 4.1 percent, taking its losses since Wednesday to a little more than 10 percent, as investors awaited the outcome of a London High Court trial on the validity of its $700 million of outstanding Islamic bonds.

The trial focuses on Dana's June announcement that it would not redeem its sukuk on the grounds that changes in Islamic financial practice had made them unlawful in the United Arab Emirates. It is not clear when the London court will rule or whether a ruling will end the dispute, which is also being fought in a UAE court.

Most other Abu Dhabi shares were weak, dragging the index .ADI 0.7 percent lower. In Dubai, the index .DFMGI fell 0.9 percent as 20 shares declined and only nine rose.

Qatar's index .QSI rose 0.6 percent, however, as regional investors stepped up their purchases of Qatari shares. They accounted for roughly 10 percent of total market turnover, bourse data showed.

Fund managers from the six-nation Gulf Cooperation Council, excluding Qatar, dumped Qatari equities after four Arab states cut ties with Doha in June. It was not clear whether some GCC investors were now buying because they hoped for a resolution of the dispute.

A little under two-thirds of the 20 most valuable Qatari companies rose on Monday, including Qatar Islamic Bank QISB.QA , which added 2.6 percent.

In Egypt, the index .EGX30 rose 0.5 percent with tourism-related companies some of the top gainers. They included Egypt Resorts EGTS.CA , which surged 9.8 percent in unusually heavy trade.

HIGHLIGHTS



SAUDI ARABIA



* The index .TASI dropped 1.4 percent to 7,224 points.



DUBAI



* The index .DFMGI fell 0.9 percent to 3,570 points.



ABU DHABI



* The index .ADI declined 0.7 percent to 4,411 points.



QATAR

* The index .QSI rose 0.6 percent to 8,449 points.



EGYPT



* The index .EGX30 rebounded 0.5 percent to 13,674 points.



KUWAIT



* The index .KWSE dropped 0.4 percent to 6,768 points.

BAHRAIN



* The index .BAX lost 0.9 percent to 1,292 points.



OMAN



* The index .MSI rose 0.6 percent to 5,130 points.

(Editing by Andrew Torchia, Larry King) ((celine.aswad@thomsonreuters.com)(+971 5 6224 7653)(Reuters Messaging: celine.aswad.thomsonreuters.com@reuters.net))