PHDC.L Share News (PHDC)

* Blue chips in Riyadh heavily traded

* Index still up 9.3 percent year-to-date

* Some foresee profit-taking after a positive FTSE decision

* Air Arabia falls to lowest level since October

* Big gain by Palm Hills sends Egypt higher

By Marwa Rashad

RIYADH, March 28 (Reuters) - Saudi Arabia's stock marketpulled back because of profit-taking on Wednesday ahead of adecision by index compiler FTSE Russell on whether to upgradeRiyadh to emerging market status, while most other regionalbourses were also weak.

The Saudi index has surged in recent weeks onexpectations of a positive decision by FTSE on Wednesday. IfMSCI also decides in June to make Saudi Arabia an emergingmarket, the bourse - which now has a capitalisation of about$500 billion -- could see foreign fund inflows exceeding $40billion in the next couple of years, analysts calculate.

The recent surge has left many valuations in line with orslightly above other emerging markets, however, so some fundmanagers think the index could drop back after a positive FTSEdecision.

The Tadawul index fell 0.5 percent to 7,900 pointsin active trade on Wednesday, remaining up 9.3 percentyear-to-date.

Previous decisions by index companies have had littlelasting impact on regional equity markets and "if oil pricesdrop back over the next couple of years as we expect, the rallyin the Tadawul is likely to fade," London-based CapitalEconomics said in a report.

Khaled Feda, senior research manager at Alistithmar Capital,said the picture remained fundamentally strong.

"The outlook is generally positive. The crown prince's visitto the U.S. and the expected inflow of foreign investment, aswell as the global indexes inclusion -- all these factors boostthe index," he said.

"There might be profit-taking over the coming few weeks, butas foreign investors come in to the market over the next 12months, the index is expected to gradually increase and couldhit the 9,000 point level."

Al Rajhi Bank, which has been the main target offoreign fund inflows ahead of the FTSE decision, pulled back 2.3percent. SAMBA Financial Group and Saudi Telecomlost 2.3 percent each.

Al Andalus Property Co dropped 7.7 percent in itsheaviest volume since May 2016, after the company reportedfourth-quarter net profit of 15.0 million riyals ($4.0 million),down from 15.8 million riyals a year earlier.

Real estate developer Jabal Omar rose 2.2 percentand food company Savola added 2.7 percent.

In Dubai, the main index was 0.1 percent lower aslow-cost airline Air Arabia fell 2.5 percent to itslowest level since October. The Abu Dhabi index lost 1.3percent with First Abu Dhabi Bank losing 3.0 percentand Abu Dhabi Commercial Bank falling 3.4 percent.

Qatar's index closed 1.6 percent down because of a3.1 percent loss by Industries Qatar and a 2.3 percentdecline by Qatar National Bank.

Qatar German Medical Devices dropped 3.7 percentin unusually heavy trade after reporting a 21.6 million riyal($5.9 million) net loss for 2017 versus a loss of 10.3 millionriyals for the previous year; the board recommended no dividend.

In Kuwait, the index closed 0.2 percent down, buttelecommunications group Zain jumped 2.2 percent afterits chief executive said its operator was waiting for approvalfrom regulators in Saudi Arabia to sell its mobile towers there.

Egypt's index closed 0.2 percent higher as realestate firm Palm Hills last traded up 15.8 percent to5.13 Egyptian pounds. Citing a presidential decree this monththat reclassified agricultural land along the Cairo-AlexandriaDesert Road for urban communities, Pharos Research kept an"overweight" rating on the stock and raised its fair valueestimate to 6.57 pounds.

SAUDI ARABIA

* The index lost 0.5 percent to 7,900 points.

DUBAI

* The index edged down 0.1 percent to 3,091 points.

ABU DHABI

* The index fell 1.3 percent to 4,551 points.

QATAR

* The index dropped 1.6 percent to 8,553 points.

EGYPT

* The index rose 0.2 percent to 17,306 points.

KUWAIT

* The index lost 0.2 percent to 6,604 points.

BAHRAIN

* The index lost 0.9 percent to 1,315 points.

OMAN

* The index rose 0.3 percent to 4,774 points.(Editing by Andrew Torchia and Jane Merriman)