* Egypt leads Middle East higher
* El Sewedy surges on wind power project
* Gulf underperforms as more austerity looms
* Potential merger partners GFH, Shuaa rise in Dubai
* Qatar Navigation tumbles as it goes ex-dividend
By Andrew Torchia
DUBAI, March 16 (Reuters) - Middle Eastern stock markets rose on Thursday, led by Egypt, after the U.S. Federal Reserve hiked interest rates as expected but signalled no acceleration in the pace of monetary tightening.
But Gulf bourses lagged emerging markets in general because of concern that low oil prices and government austerity measures will continue to weigh on corporate earnings. Among planned austerity, the six-nation Gulf Cooperation Council plans to introduce a 5 percent value-added tax in 2018.
The Saudi stock index rose 1.3 percent, while Dubai was up 1.2 percent and Qatar added 0.7 percent. MSCI's emerging market index surged 2.0 percent.
Saudi banks outperformed for a second straight day, after Moody's raised its outlook for the Saudi banking sector to stable from negative on Wednesday. Banque Saudi Fransi rose 3.2 percent and National Commercial Bank, the largest lender, added 2.1 percent.
In Dubai, GFH Financial gained 1.5 percent and Shuaa Capital added 1.1 percent. GFH confirmed earlier this week that the two firms were in talks to merge and after a week of silence, Shuaa issued a brief statement on Thursday saying preliminary discussions were taking place but no decision had been reached.
Qatar was buoyed by a 1.6 percent rise by Qatar National Bank, although Qatar Navigation sank 5.1 percent as it went ex-dividend.
Abu Dhabi's index rose 1.1 percent, but was restrained by Abu Dhabi Commercial Bank, which fell 2.4 percent as it went ex-dividend.
Five central banks in the GCC raised interest rates in line with the Fed and the sixth, Oman, had already been allowing its policy rate to drift higher in recent months.
However, market interest rates in the Gulf will not necessarily rise because a partial rebound in oil prices and governments' international bond issues have eased pressure on state spending. This could improve liquidity in the money markets over coming months.
In Egypt, the index jumped 1.9 percent as El Sewedy Electric climbed 2.5 percent after signing a memorandum of understanding with the Egyptian Electricity Transmission Co to build a wind power plant in collaboration with Japan's Marubeni.
* The index climbed 1.3 percent to 6,922 points.
* The index rose 1.2 percent to 3,521 points.
* The index gained 1.1 percent to 4,425 points.
* The index added 0.7 percent to 10,361 points.
* The index edged up 0.2 percent to 6,811 points.
* The index jumped 1.9 percent to 12,984 points.
* The index edged up 0.1 percent to 5,668 points.
* The index rose 0.3 percent to 1,375 points.
Editing by Mark Potter