(Updates with Saudi Arabia, Egypt open)

DUBAI, June 3 (Reuters) - Saudi Arabia's stock market slipped in early trade on Wednesday, tracking oil prices, while Egypt's bourse extended its rally after data showed a slight improvement in the outlook for business activity.

The main Saudi index .TASI edged down 0.2 percent and heavyweight petrochemicals firm Saudi Basic Industries 2010.SE lost just as much.

Oil shipper Bahri 4030.SE dropped 2.2 percent after the stock exchange said on Tuesday it was one of five local companies in which foreigners would not be able to buy shares when the market opens to direct foreign investment this month. ID:nL5N0YO1RZ

The other four companies are real estate developers and focus on the holy cities of Mecca and Medina. Saudi media had previously reported that this could be a reason for restrictions on ownership of their shares.

Another negative factor for the market was a relatively weak purchasing manager index. Growth in Saudi Arabia's non-oil private sector slowed to a 12-month low in May as expansion of both output and new orders slackened, the PMI survey showed on Wednesday. ID:nL9N0WK01R

In Egypt, business activity in the private sector, excluding oil, shrank for the fifth month in a row in May but edged closer to expansion as employment rose, a similar survey indicated. ID:nL5N0YO17C

The Cairo index .EGX30 rose 1.2 percent as most stocks gained. Ezz Steel climbed 0.7 percent despite swinging to an annual financial loss.

Egypt's biggest steelmaker reported a net loss of 836 million Egyptian pounds ($109.5 million) for 2014, compared to a net profit of 528 million pounds in the previous year. ID:nL5N0YP11V

(Reporting by Olzhas Auyezov; Editing by Andrew Torchia and Tom Heneghan) ((olzhas.auyezov@thomsonreuters.com; +971 56 225 4871; Reuters Messaging: olzhas.auyezov.thomsonreuters.com@reuters.net))

Keywords: MARKETS STOCKS/MIDEAST