* Highest Dubai turnover since spike on June 3
* Retail investors bet on small-caps
* Rise in land transaction fee doesn't hurt property stocks
* Saudi large-caps sold before Q3 earnings
* Egypt fails to confirm break of technical resistance
By Nadia Saleem
DUBAI, Sept 29 (Reuters) - Dubai's shares rose to their highest level in almost five years in heavy trading on Sunday as retail investors bet on small-caps ahead of third-quarter earnings, while other regional markets were mixed.
Dubai's benchmark advanced 1.2 percent to 2,771 points, its highest finish since November 2008, taking year-to-date gains to 70.8 percent. Turnover surged to 1.3 billion dirhams ($354 million), the biggest daily value since a spike on June 3.
"We have a lot of catalysts - real estate is doing well, the Expo 2020 decision is coming up and later, people will start gearing up for the MSCI upgrade," said Amer Khan, fund manager at Shuaa Asset Management. "Political risk has dissipated and the outlook is positive."
Sunday's rise suggested a break above the August peak of 2,762 points, though another daily close will be needed for confirmation. A double bottom formed by lows dating back to 2009 points the index up to the 3,500-point area in the long term.
The World Expo committee will make a decision on Nov. 27 on whether or not Dubai will win the rights to host the world's fair in 2020. Index compiler MSCI upgraded the United Arab Emirates and Qatar to emerging market status earlier this year, which will bring in fresh foreign funds when it takes effect in June 2014.
Khan said that despite Dubai's hefty 2013 gains, the market was not expensive in terms of valuations because of the positive catalysts. Analysts are expecting modest profit growth for the third quarter, however, with the hot summer having a dampening effect on some sectors.
Small-cap Gulf Navigation surged 15 percent on Sunday, leaving it up 82.1 percent since the firm's announcement of plans to sell some ships and raise capital a week ago. It accounted for more than a third of total shares trading.
Thursday's news that Dubai will double its land transaction fee to 4 percent did not dampen the real estate market or property stocks significantly.
"Even if the fee is increased by the DLD, in the global context, purchase costs will still be relatively low," property consultants Knight Frank said in a report.
In Saudi Arabia, the index declined 0.4 percent, down for a fourth consecutive session to hit a two-week low.
Investors sold most large-cap stocks ahead of third-quarter earnings. Analysts and investors are expecting most earnings growth to come from sectors that rely on domestic demand, which benefits from a strong economy and growing population.
The petrochemical sector slipped 0.5 percent; Saudi Basic Industries Corp (SABIC) retreated 0.3 percent. Heavyweight Al Rajhi Bank shed 0.6 percent.
"We continue to remain bullish on consumer and retail plays," said John Sfakianakis, chief investment strategist at Saudi investment firm MASIC. "The overall sentiment will depend on how well petrochemical and banking names will do. I'm slightly optimistic on some banks but not expecting stellar results."
Tight net interest margins continue to weigh on profitability at Saudi banks and are limiting growth despite strong lending growth, he added.
Elsewhere, Qatar's measure recovered from a two-week low and climbed 0.5 percent as bargain-unters returned. The market fell 2.6 percent last week as investors cashed out to participate in an expected upcoming new listing of a Qatar Petroleum unit.
In Egypt, Cairo's benchmark index slipped 0.6 percent to 5,667 points, easing off a seven-month high. It failed to confirm a break of chart resistance at 5,682 points, the August peak.
The market was little moved by comments from Egyptian Foreign Minister Nabil Fahmy; he said on Saturday that the transitional phase of government should end "by next spring", replacing leaders appointed after the army ousted elected president Mohamed Mursi in July.
Egyptians joined foreigners as net sellers, while regional Arabs were net buyers, according to bourse data.
* The index rose 1.2 percent to 2,771 points.
* The index slipped 0.4 percent to 7,950 points.
* The index climbed 0.5 percent to 9,626 points.
* The index gained 0.3 percent to 7,809 points.
* The index slipped 0.6 percent to 5,667 points.
* The index eased 0.04 percent to 3,837 points.
* The index gained 0.3 percent to 6,677 points.
* The index declined 0.2 percent to 1,195 points.