Saudi stocks rose for a second straight day on Tuesday, continuing to recover after falling last week following attacks on oil tankers in the Gulf of Oman.

Investor concerns have eased somewhat after both Tehran and Riyadh said they did not want a war, but tensions in the region remain high, making stock trading potentially volatile.

The Saudi index was up 0.4 percent in early trading, but other major stock markets in the Gulf fell.

Iranian President Hassan Rouhani said on Tuesday that Iran will not wage war against any nation, a day after the United States announced the deployment of more troops to the Middle East amid rising tensions between Tehran and Washington.

On Saturday, Saudi Crown Prince Mohammed bin Salman urged the international community to take a "decisive stand" but said Riyadh does not want a war.

Saudi banking shares rose on Tuesday.

Al Rajhi Bank gained 0.6% and Saudi British Bank was 2.1% higher. On Sunday, the latter completed its merger with Alawwal Bank creating the country's third-largest bank, becoming a single listed company after regulatory approvals. Alawwal Bank was de-listed from the bourse on Monday.

Qatar's index fell 0.3%, down for a fourth straight session mainly pressured by its financial stocks. Qatar National Bank shed 1.8% and Qatar Islamic Bank dropped 0.4%.

On Monday, Moody's said in a note that Bahrain, Kuwait, Qatar and Iraq are most exposed to Iran's potential blockade of the Strait of Hormuz.

Iran's military denied on Monday being behind the attacks on oil tankers in the Gulf of Oman last week, and said if it decided to block the Strait of Hormuz, a vital gateway in the Gulf for the oil industry, it will do it publicly.

The Dubai index, which had traded flat in the previous session, was down 0.2% on Tuesday, hurt by real estate shares. Emaar Properties slid 1.2% and its unit Emaar Malls lost 1.1%.

In Abu Dhabi, the index traded flat with First Abu Dhabi Bank, the country's largest lender, gaining just 0.1%.

(Reporting by Ateeq Shariff in Bengaluru; Editing by Susan Fenton) ((AteeqUr.Shariff@thomsonreuters.com; +918067497129;))