* Saudi petchems lead market up
* Emaar, The Economic City jumps on sovereign fund interest
* Property shares support Dubai, Abu Dhabi before exhibition
* Dubai's volume at four-month high
* Shuaa Capital surges daily limit
By Celine Aswad
DUBAI, Sept 5 (Reuters) - Saudi Arabia's stock market posted its biggest daily gain in four months on Monday as oil prices surged, while shares of Dubai's property developers rose before a major exhibition for the industry this week.
Riyadh's stock index .TASI rose 1.7 percent to 6,204 points, and trading volume grew by more than half, as Brent crude futures LCOc1 jumped almost 5 percent before a news conference at which Saudi Arabia and Russia said they would cooperate in oil markets.
The two countries said they would not act immediately, and many analysts doubt the agreement will make much difference to oil prices in the long run. But oil's surge was enough to boost Saudi petrochemical shares, with bellwether Saudi Basic Industries 2010.SE gaining 2.7 percent.
Also aiding sentiment was a purchasing managers' survey that showed growth in Saudi Arabia's non-oil private sector hit a 12-month high in August, suggesting the economy may be stabilising after a slowdown driven by low oil prices and government austerity measures.
The positive mood spilled into other sectors. Saudi British Bank 1060.SE jumped 4.8 percent to 19.80 riyals.
"The market seems to be bouncing from 6,000 points, supported by developments in the oil market. Over the last several weeks, the market has been pricing in negative economic expectations, and the recovery in oil is a nice positive surprise," said Mohammad al-Shammasi, chief investment officer at Riyadh-based Derayah Financial.
Some banks, depressed by concern about Saudi Arabia's economic slowdown and the threat of bad debt in the slumping construction sector, are trading below what analysts consider to be fair value. SABB, for example, is at a 21 percent discount to the mean target price of 10 analysts polled by Reuters.
Emaar, The Economic City 4220.SE surged 4.5 percent in unusually heavy trade. The stock is now up 8.2 percent since Sunday, when Reuters quoted a source as saying Saudi Arabia's top sovereign fund, the Public Investment Fund, was in talks to invest in King Abdullah Economic City, the huge project being developed by EEC.
Middle East Healthcare Co 4009.SE added 5.0 percent after saying Saudi tax authorities have agreed to its request for a 13.6 million riyal ($3.6 million) tax credit.
PROPERTY PROPELS DUBAI
Other Gulf markets closed on Monday before oil prices took off, but Dubai .DFMGI edged up 0.3 percent in the highest volume for four months. Cityscape, the property exhibition which will open in Dubai on Tuesday, offers companies a platform to announce new projects and contract awards.
Union Properties UPRO.DU , the most heavily traded stock on the exchange, gained 4.0 percent. Deyaar Development DEYR.DU rose 1.8 percent after saying it had started work on a Dubai hotel project.
Shuaa Capital SHUA.DU surged 15.00 percent, its daily limit, to a 16-month high. Shares in the investment firm have gained 22.6 percent since Thursday, when Nasdaq Dubai began trading single-stock futures on shares in some of the United Arab Emirates' biggest companies. Shuaa is providing market-making facilities.
At an event hosted by Nasdaq Dubai on Monday, brokers who have been trading the futures said transactions had been running smoothly so far, though volumes were expected to remain low for now as most institutional investors were still on the sidelines.
In Abu Dhabi, the index .ADI rose 0.9 percent as some property developers advanced. Aldar Properties ALDR.AD , which is exhibiting at Cityscape and reported strong demand for its Yas Acres development, added 1.5 percent.
Qatar's main index .QSI edged down 0.1 percent as half of traded stocks pulled back. Qatar Gas Transport QGTS.QA , the biggest loser, dropped 1.3 percent.
In Egypt, the main index .EGX30 added 0.4 percent in thin trade, with a little over a quarter of shares advancing. Global Telecom Holding GTHE.CA , a stock favoured by foreign traders, climbed 0.5 percent.
* The index .TASI rose 1.7 percent to 6,204 points.
* The index .DFMGI edged up 0.3 percent to 3,546 points.
* The index .ADI rose 0.9 percent to 4,512 points.
* The index .EGX30 added 0.4 percent to 8,271 points.
* The index .QSI slipped 0.1 percent to 10,840 points.
* The index .KWSE slipped 0.3 percent to 5,381 points.
* The index .MSI rose 0.4 percent to 5,749 points.
* The index .BAX fell 0.5 percent to 1,135 points.
(Editing by Andrew Torchia, Larry King) ((firstname.lastname@example.org; +971 4 4536886; Reuters Messaging: email@example.com))