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MIDEAST STOCKS-Trade tensions, tanker attacks darken mood in Gulf markets

* Saudi insurers among biggest fallers after weak Q1 results * Abu Dhabi suffers worst day in 3-1/2 years * Dubai in sharpest one-day decline in 3 years * 18 of 20 Qatari stocks slide By Shakeel Ahmad May 13 (Reuters) - Dubai and Abu Dhabi stock markets suffered their biggest single-day decline in years on Monday after several commercial ships were attacked off the coast of the United Arab Emirates.

Saudi shares had their worst day since mid-October after Riyadh said two of its oil tankers were among the vessels hit in the attacks.

Saudi Arabia's index declined 3.6%, with Al Rajhi Bank dropping 4.6% and petrochemical group Saudi Basic Industries falling 5.1%. The index is down nearly 10% since the start of May.

Saudi Arabia said the two Saudi oil tankers were attacked off the coast of the UAE and said it was an attempt to undermine the security of crude supplies amid heightened U.S.-Iranian tensions.

The UAE said on Sunday that four commercial vessels were sabotaged near Fujairah emirate, one of the world's largest bunkering hubs lying just outside the Strait of Hormuz, but did not say who was behind the attack or describe the nature of it.

“The declines today in the Gulf markets reflect cautious sentiment amongst investors amid regional uncertainty," said Mihir Kapadia, chief executive, Sun Global Investments. "The sabotage attack of two Saudi oil tankers off the coast of the UAE has surprised investors who are already jittery due to rising trade tensions between the U.S. and China." Shares in National Shipping Company of Saudi Arabia (Bahri) dropped 3%, after trading and shipping sources said the Saudi vessels targeted were Bahri-owned very large crude carrier Amjad and crude tanker Al Marzoqah.

Bahri did not respond to a request for comment.

Insurance companies were among biggest fallers on the Saudi market. Gulf Union Cooperative Insurance and Salama Cooperative Insurance each fell 10% after they reported first-quarter losses, citing increased net claims.

Vrajesh Bhandari, senior portfolio manager at Al Mal Capital, said Saudi Arabia has its own dynamics. With about 10% correction in large caps, we see it as a tactical opportunity to position for the first tranche of MSCI, he said.

Saudi Arabia is due to be included in the MSCI index from later this month.

The Dubai index was down 4% in the sharpest single-day decline since June, 2016 with 26 of 37 stocks falling and none rising.

Financial and real estate stocks were hit the hardest. The emirate's largest listed developer, Emaar Properties, lost 5.9%, and its biggest bank, Emirates NBD, closed 3.6% lower.

Bhandari said sentiment was weak and that investors would like to profits in stocks that have done well – such as Emirates NBD.

"Overall, we expect markets to be volatile given seasonal factors - Ramadan and the summer. Global factors aren’t helping either," Bhandari added.

Financials also pushed Abu Dhabi's index down 3.3%, its biggest one-day drop since January, 2016.

First Abu Dhabi Bank, the UAE's biggest bank, shed 3.1% and Emirates Telecommunications Group dropped 5.7%.

Qatar's index lost 1.9% with 18 of its 20 stocks declining. Market heavyweight Qatar National Bank decreased 2.8% while lender Masraf Al Rayan was down 3.1%.

Outside the Gulf, Egypt's blue-chip index fell 1.5% mirroring decline in emerging markets as concerns over U.S.-China trade dispute intensified.

The country's top bank, Commercial International Bank and investment firm, Egypt Kuwait Holding, dropped 1.7% and 2.3%, respectively.

SAUDI The index was down 3.6% at 8,367 points ARABIA ABU DHABI The index fell 3.3% to 4,929 points DUBAI The index lost 4% to 2,526 points QATAR The index slid 1.9% to 9,740 points EGYPT The index was down 1.5% to 13,905 points BAHRAIN The index was down 0.8 pct at 1,416 points OMAN The index slipped 0.7% to 3,840 points KUWAIT The index lost 1.4% to 6,079 points (Reporting by Shakeel Ahmad in Bengaluru and Saeed Azhar in Dubai. Editing by Jane Merriman)