* Surpluses, currency pegs make Gulf stronger than most markets
* Gulf drops about half as much as MSCI emerging index
* Dubai index consolidating in symmetrical triangle
* Kuwait not worried by looming elections
* Egypt falls but foreigners are net buyers
By Nadia Saleem
DUBAI, June 20 (Reuters) - Gulf stock markets retreated on Thursday after the U.S. Federal Reserve said it would start cutting back its bond-buying stimulus this year, but the region reacted more calmly to the Fed than most of the world.
MSCI's benchmark emerging markets index was down 3.3 percent in the late Gulf afternoon. But Gulf markets performed much better, with Dubai closing only 1.4 percent lower and Qatar dropping 1.0 percent. Saudi Arabia was shut for the weekend.
Budget and current account surpluses in the Gulf, as well as its currency pegs to the U.S. dollar and solid economic growth backed by strong consumer spending as well as high oil prices, are shielding the region from the worst of the global turmoil, fund managers said.
"Our growth drivers are local and we're not relying on international finances," said Rami Sidani, Schroders Middle East head of investment.
"I don't expect the outlook for our region to change as fundamentals are strong and valuations continue to be compelling."
Dubai's drop cut its 2013 gains to 45.5 percent. Since the turmoil in emerging markets worsened about three weeks ago, Dubai's rally has halted and trading turnover has dropped.
However, its index continues to consolidate in a symmetrical triangle that does not so far indicate any downtrend. Despite the start of the summer, which tends to reduce trading activity as local investors take holidays, turnover in Dubai remains much higher than it was last year, before the bull run started.
Kuwait's index slipped 0.2 percent, easing slightly for a third straight session following an early-week rally, but leaving it up 35.8 percent year-to-date.
The market rose on Monday after a constitutional court ruling dissolved parliament and called for fresh elections within two months, and prices have generally held up since then, showing investors believe the polls will produce a parliament that is willing to cooperate with the cabinet on economic development.
After the close, Kuwait's state news agency KUNA said the election would be held on July 25.
In Egypt, the market fell 1.2 percent as local investors continued to sell because of political tensions and the Egyptian pound's drop below 7.00 to the dollar on the official market for the first time on Wednesday.
However, Egyptian Exchange data showed Arab and non-Arab foreign investors were net buyers of stocks.
* The index lost 1.4 percent to 2,361 points.
* The index fell 0.9 percent to 3,632 points.
* The index retreated 1.0 percent to 9,246 points.
* The index dropped 1.2 percent to 6,390 points.
* The index slipped 0.2 percent to 8,060 points.
* The index fell 1.2 percent to 4,626 points.
* The index eased 0.06 percent to 1,202 points.