DUBAI, Jan 1 (Reuters) - Saudi Arabia's stock market rose in early trading on Sunday with activity focusing on second- and third-tier stocks rather than blue chips.

The main Saudi index .TASI was up 0.5 percent in the first hour. Petrochemical and banking blue chips were little changed but major gains were seen in stocks such as conglomerate Jazan Development 6090.SE , which jumped 5.9 percent after announcing a 0.50 riyal per share dividend for 2016.

Saudi Automotive Services surged its 10 percent daily limit after saying it would post a special gain of 4.4 million riyals ($1.2 million) for the fourth quarter after selling two of its equities investment portfolios.

Nama Chemicals 2210.SE plunged by its 10 percent daily limit for a second straight day. It resumed trading last week after its shares were suspended for a day because its accumulated losses had reached more than 75 percent of its capital. The company now plans a capital reduction.

Oman's stock index .MSI dropped 0.7 percent as Oman Telecommunications OTL.OM tumbled 4.0 percent and rival Ooredoo Oman ORDS.OM sank 6.7 percent.

On Thursday, the Capital Market Authority said Oman's telecommunications companies would pay a royalty to the government of 12 percent of revenues in 2017, up from 7 percent.

Other markets in the Gulf, as well as Cairo's exchange, were closed for New Year holidays.

(Reporting by Andrew Torchia; editing by David Clarke) ((andrew.torchia@thomsonreuters.com)(+9715 6681 7277)(Reuters Messaging: andrew.torchia.thomsonreuters.com@reuters.net))