(Adds quotes, details)
DUBAI, June 3 (Reuters) - Qatar's stock index
The Doha benchmark dropped as much as 3.2 percent shortly after the market opened, before cutting its losses to 1.6 percent.
Blatter's resignation "is the primary driver for sure", said Amer Khan, senior executive at Shuaa Asset Management in Dubai. "As and when further developments take place, the market will react."
Doha was chosen to host the FIFA 2022 World Cup in a 2010 vote. But that decision has been dogged by controversy and Blatter's decision to quit, just days after he was elected as FIFA president for a fifth term, increased investor fears that Qatar could be stripped of its hosting rights.
It is not yet clear whether Qatar faces any serious risk of losing the rights. It has denied any wrongdoing in the bidding process and appears set to fight any attempt to take away the Cup.
Losing it would have little impact on the super-wealthy state, which is the world's biggest natural gas exporter. The government could easily afford the waste of several billions of dollars building unused stadiums, and analysts believe most of its major infrastructure building plans would go ahead, since they are not primarily aimed at World Cup visitors.
But Qatari retail investors have reacted emotionally in the past year to any suggestion that the World Cup might be lost, selling shares because of this concern.
All components of Qatar's 20-stock index fell on Wednesday, except Gulf International Services
Elsewhere, bourses in Abu Dhabi
But Dubai
Amlak Finance
Trading in Amlak had been suspended for nearly six years because of debt problems before it restarted on Tuesday, when it closed flat.
(Reporting by Olzhas Auyezov; editing by Andrew Torchia and Jason Neely) ((olzhas.auyezov@thomsonreuters.com; +971 56 225 4871; Reuters Messaging: olzhas.auyezov.thomsonreuters.com@reuters.net))
Keywords: MARKETS STOCKS/MIDEAST