DUBAI - Egypt's stock index climbed on Thursday ahead of a central bank meeting on monetary policy later in the day, while the banking sector helped carry the Saudi index higher after news that the government had priced a $12.5 billion international bond issue.

The Egyptian central bank was likely to keep key interest rates unchanged at its meeting, a Reuters poll of analysts showed, after a slide of inflation that is expected to continue in the last quarter of 2017.

The main stock index .EGX30 rose 1.1 percent on Thursday as it priced in the "end of the monetary and fiscal tightening period", said Wafik Dawood of Beltone Capital.

"Though the market consensus is for rates to remain unchanged on Thursday, inflation has peaked, rates have peaked - this bodes well for the market," he added.

The central bank hiked interest rates in July by 200 basis points. Analysts at Naeem Brokerage suggested the central bank might even cut rates on Thursday, by 100 bps.

"Our expectation is backed by the assumption that the central bank would weigh more into consideration the latest monthly inflation patterns, instead of annual rates," Naeem said in a note.

Construction and development companies were particularly strong in Egypt on Thursday as their financing costs may have peaked along with the interest rates; Emaar Misr Development EMFD.CA jumped 6.6 percent.

The Riyadh index .TASI rose 0.7 percent as most large-cap banks climbed following news of the successful sovereign bond sale, which attracted investor demand of around $40 billion. Shares of majority state-owned National Commercial Bank 1180.SE added 1.1 percent.

The bond issue is good news for the Saudi banking sector because it will help to increase liquidity and gives the government financial room to move ahead with projects.

Petrochemical shares were also strong as Brent oil LCOc1 climbed over $58 a barrel; Saudi Basic Industries 2010.SE advanced 2.1 percent.

Auto insurance, rental and parts companies, which had surged on Wednesday in response to news that a ban on women driving would be lifted next year, mostly fell back. Al Rajhi Co for Cooperative Insurance 8230.SE dropped 2.5 percent.

Qatar's index .QSI lost 1.3 percent, heading back near a five-year low, as foreign funds intensified their selling, bourse data showed. Banking shares were particularly weak, with Qatar National Bank QNBK.QA dropping 1.4 percent.

The Dubai index .DFMGI edged up 0.1 percent as shares favoured by day traders outperformed large-caps; Union Properties UPRO.DU rose 1.1 percent while Emaar Properties EMAR.DU lost 0.7 percent. In Abu Dhabi, the index .ADI fell 0.2 percent.



HIGHLIGHTS



SAUDI ARABIA



* The index .TASI rose 0.7 percent to 7,283 points.



DUBAI



* The index .DFMGI edged up 0.1 percent to 3,564 points.



ABU DHABI



* The index .ADI fell 0.2 percent to 4,397 points.



QATAR

* The index .QSI dropped 1.3 percent to 8,312 points.



EGYPT



* The index .EGX30 rose 1.1 percent to 13,889 points.



KUWAIT



* The index .KWSE lost 1.3 percent to 6,680 points.

BAHRAIN



* The index .BAX slipped 0.02 percent to 1,283 points.



OMAN



* The index .MSI edged down 0.03 percent to 5,137 points.

(Editing by Andrew Torchia and Gareth Jones) ((celine.aswad@thomsonreuters.com)(+971 5 6224 7653)(Reuters Messaging: celine.aswad.thomsonreuters.com@reuters.net))