* Dubai drops 4.1 pct and has fallen 12.6 pct in a week, to 4,655 points
* Seen falling further to around 4,200-4,300 points
* Index is up 187 pct from start of 2013
* Abu Dhabi hits two-month low
* Saudi lacklustre as fund managers free up cash for upcoming IPOs
* Healthcare firm Al Hammadi given nod for IPO next month
By Matt Smith
DUBAI, May 20 (Reuters) - Dubai's index tumbled to a six-week low on Tuesday as investors booked profits from a near 18-month bull run, while Saudi Arabia's bourse was again lacklustre and is seen stuck in the doldrums until July's results season.
Dubai's benchmark dropped 4.1 percent to 4,656 points, its lowest finish since April 7.
It fell 5.5 percent the day before and rebounded in early Tuesday trade, but buying pressure was brief and it has fallen 12.6 percent in a week, trimming 2014 gains to 38.2 percent.
"A revaluation of the market has been happening for the past week - the fundamentals haven't changed, it's pure profit-taking by speculators," said Samer al-Jaouni, a Gulf-based trader.
Dubai's measure is up 187 percent since the start of 2013 as renewed confidence in Dubai's property sector and a retail and tourism boom brought traders back to the emirate's beleaguered stock market.
But analysts had warned that such a surge was unsustainable, even with index compiler MSCI upgrading the United Arab Emirates to emerging market status, effective June 1.
"A lot of the earlier buying was by speculators ahead of MSCI," said Jaouni.
He said high valuations were likely to deter foreign funds that track MSCI's emerging index from buying UAE stocks immediately after the upgrade comes into effect.
"We might see a further downside to levels where prices can be justified," said Jaouni, adding this would likely be around 4,200 to 4,300 points. "Investors will be much pickier - volatility will remain high and we'll still see some speculation, but it will be much less than before and volumes may decline dramatically in the coming months."
Most of Tuesday's activity was aimed at property-related stocks, which are a favourite target for day-traders.
Builder Arabtec fell 8.6 percent, Emaar Properties dropped 3.7 percent and Union Properties lost 2.8 percent.
Abu Dhabi fell 2.5 percent to a two-month low of 4,750 points. It is up 10.7 percent in 2014.
Elsewhere, Saudi Arabia's index rose 0.07 percent to 9,731 points, but is down 1 percent from Wednesday's six-year high, having failed to break above 9,830 points.
"It gives the possibility for new cash to come into the market," said Hesham Tuffaha, a Riyadh-based portfolio manager.
"When there's a continuous rally, there's usually money on the sidelines waiting for a correction."
He said Saudi's stuttering performance in the past week was due to a glut of local share sales in the offing. These include floatations from National Commercial Bank, the kingdom's largest lender, and hotel and leisure group Abdul Mohsen al-Hokair.
On Monday, the Saudi regulator also granted approval for healthcare firm Al Hammadi Company For Development & Investment to float 30 percent of its shares. Samba Capital will arrange the offering, which will consist of a bookbuilding period with institutional investors before being opened to subscription by retail investors between June 11-17.
"Fund managers are under pressure to liquidate some positions to free up cash for these," said Tuffaha.
He predicted the kingdom's bourse will trade between 9,700 and 9,800 points until early in July, when second-quarter earnings season begins.
Egypt's index climbed 0.9 percent to its highest close since August 2008.
* The index fell 4.1 percent to 4,656 points.
* The index fell 2.5 percent to 4,750 points.
* The index climbed 0.07 percent to 9,731 points.
* The index rose 0.9 percent to 8,658 points.
* The index fell 0.4 percent to 12,734 points.
* The index rose 0.4 percent to 7,380 points.
* The index rose 0.3 percent to 6,797 points.
* The index dropped 0.3 percent to 1,450 points. (Editing by Praveen Menon)
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