DUBAI, Oct 23 (Reuters) - National Commercial Bank (NCB) and telecom stocks dragged down Saudi Arabia's main index on Monday while Emaar Properties weighed on Dubai's stock market for the second day in a row.

The Saudi index .TASI fell 1.3 percent to 6,886 points on the back of the banking and insurance sectors, as NCB reported an 8.4 percent rise in third-quarter net profit, or around 5 percent below analysts' estimates. It fell 4.8 percent.

Bank Aljazira 1020.SE fell 1.0 percent, although it reported a 41 percent rise in third-quarter net profit to 228 million riyals. Alawwal Bank 1040.SE also sank 3.4 percent. Alinma Bank 1150.SE was the most heavily traded stock and lost 2.1 percent.

Most Saudi insurers also fell: Metlife AIG ANB Cooperative Insurance 8011.SE fell 1.7 percent and Malath Insurance 8020.SE lost 3.7 percent.

"NCB is one of the first stocks to affect the Saudi index, all the other banks and insurers just followed," said Jassim al Jubran, equity researcher at Aljazira Capital in Riyadh.

Saudi Arabia's Etihad Etisalat 7020.SE (Mobily) sank 7.3 percent after it reported a third-quarter loss on Monday, blaming a rule introduced last year requiring fingerprints be registered with SIM cards for shrinking the telecom market.

"Retail investors represent almost 90 percent of the market, so they tend to react immediately to the news," Al Jubran added.

The Dubai index .DFMGI lost 0.7 percent as Emaar EMAR.DU fell another 2.3 percent, after losing 2.1 percent on Sunday, after it said it expects to sell 20 percent of its local property development unit Emaar Development LLC next month in an initial public offering.

Previously, Emaar had said it would offer up to 30 percent of the business, distributing funds raised as dividends to shareholders in the parent company. It did not say on Sunday why the sale was expected to be only 20 percent.

GFH Financial GFH.DU slipped 3.5 percent in heavy trade after rising on Sunday, when the United Arab Emirates securities regulator approved the listing of Bahrain's Khaleeji Commercial Bank KHCB.BH , subject to approval by the Bahrain central bank.

GFH owns 47 percent of Khaleeji, and has long been aiming to list the bank in Dubai.

The losses in Dubai were mitigated by Drake & Scull International DSI.DU , which gained 2.5 percent and was the most heavily traded stock.

Qatar's index .QSI was down 0.5 percent after U.S. Secretary of State Rex Tillerson, who arrived in Doha on Sunday, said there was little chance of a swift breakthrough to resolve a blockade imposed on the Gulf state by Saudi Arabia and its Arab allies.

Qatar National Bank QNBK.QA , the biggest bank in the Middle East, lost 1.1 percent. Ahli Bank AABQ.QA sank 7.7 percent.

In Egypt, the index .EGHX30 surged 1.2 percent as Juhayna Food Industries JUFO.CA gained 4.2 percent after it reported a 12 percent rise in third-quarter consolidated net profit attributable to shareholders. In the first half of the year, its profits had dropped.



HIGHLIGHTS



SAUDI ARABIA



* The index .TASI fell 1.7 percent to 6,886 points.



DUBAI



* The index .DFMGI dropped 0.7 percent to 3,618 points.



ABU DHABI



* The index .ADI was flat at 4,499 points.



QATAR



* The index .QSI fell 0.5 percent to 8,158 points.



EGYPT



* The index .EGX30 rose 1.2 percent to 13,870 points.



KUWAIT



* The index .KWSE edged down 0.4 percent to 6,622 points.



BAHRAIN



* The index .BAX added 0.3 percent to 1,287 points.



OMAN



* The index .MSI dropped 0.3 percent to 5,033 points.

(Reporting By Aziz El Yaakoubi, editing by Larry King) ((aziz.elyaakoubi@thomsonreuters.com; +971552994086))