* Arqaam Capital calls tax deal positive for Saudi banks
* Dubai's Emirates NBD falls sharply in thin trade
* Union Properties jumps on proposed share buy-back
* Egypt drops but foreign investors are net buyers
* EFG Hermes gains on news of deals
By Ateeq Shariff
Dec 24 (Reuters) - Saudi Arabia's stock index rose on Monday as banks rebounded after a sell-off triggered by news of a deal with tax authorities, while Dubai dropped to a five-year low, pressured by a slide in Emirates NBD.
The Saudi index was up 0.4 percent with Samba Financial Group gaining 1.7 percent and Alinma Bank adding 2.0 percent. Ten of 12 banking stocks rose.
The sector weakened on Sunday after banks agreed with Islamic tax authorities to resolve a dispute over increased liabilities that will result in one-off payments, although many banks had already made provisions for much of the liabilities.
Months of uncertainty over the settlement unsettled some investors, but analysts at Arqaam Capital said the 16.5 billion riyal ($4.4 billion) settlement was a "non-event" for banks fundamentally, with a cumulative impact of just 3 percent on shareholders' equity and 60 basis points on capital adequacy ratios in coming years.
"We remain overweight on Saudi banks and view this settlement as a positive event ahead of even more pivotal catalysts, Arqaam said, pointing to Saudi Arabia's inclusion in emerging market indexes next year and an expected rise in domestic interest rates.
Amana Insurance plunged 9.9 percent in fairly active trade. The stock has surged more than 50 percent in the last few months.
Dubai's index fell 0.7 percent to a five-year low, bringing its losses year-to-date to 27 percent. The market has been hit hard by slumping real estate prices in the United Arab Emirates, as well as the economic slowdown in Saudi Arabia.
Emirates NBD, Dubai's biggest bank, shed 5.6 percent in thin trade. Dubai Financial Market, operator of the exchange, lost 4.2 percent and DAMAC Properties was down 1.4 percent.
But Union Properties jumped 5.3 percent after saying it would hold a board meeting on Thursday to consider buying back 10 percent of its shares, in order to resell them later.
The Egyptian blue-chip index fell 1.3 percent, mirroring a slump in emerging markets generally. Egypt's largest lender, Commercial International Bank, slid 2.5 percent while El Sewedy Electric lost 2.6 percent.
However, foreign investors were net buyers of Egyptian stocks by a small margin, exchange data showed.
EFG Hermes gained 3.1 percent. GEMS Education, which has a 50/50 joint venture agreement with EFG Hermes, exercised an option to buy a 50 percent stake in four schools in Egypt. Vortex Energy, a European renewable energy platform managed by the private equity arm of EFG Hermes, signed a deal to divest 49 percent of its wind power portfolio.
Qatar's index was up 0.3 percent with Islamic bank Masraf Al Rayan rising 1.9 percent. But Mazaya Qatar Real Estate Development lost 2.0 percent, giving up Sunday's gains, when it rose after saying it would study the possibility of merging with Al Bandari Real Estate Co.
SAUDI ARABIA * The index gained 0.4 percent to 7,765 points EGYPT *The EGX 30 Index lost 1.3 percent to 12,784 points DUBAI * The index fell 0.7 percent to 2,460 points ABU DHABI * The index was flat at 4,818 points QATAR * The Index added 0.3 percent to 10,368 points KUWAIT * The index edged up 0.1 percent to 5,304 points BAHRAIN * The index was down 0.1 percent at 1,313 points OMAN * The index was up 0.2 percent at 4,346 points (Editing by Andrew Torchia and Kirsten Donovan)