* First Abu Dhabi Bank up in heavy trade
* TAQA falls on profit taking, state-utility increases stake
* Dubai supported by large caps
* Egypt up, may test Jan resistance
* Saudi near flat in very thin trade
By Celine Aswad
DUBAI, April 4 (Reuters) - Stock markets in the Middle East rose on Tuesday with Abu Dhabi gaining the most, buoyed by heavy trade in the shares of a newly merged bank while buying from foreign funds boosted Egypt.
Shares of recently merged First Abu Dhabi Bank jumped 4.8 percent in very heavy trade, helping lift Abu Dhabi's index 1.8 percent.
Shares of Abu Dhabi National Energy, however, retreated 5.3 percent as investors booked profits after they had soared 24 percent since Sunday.
On Tuesday, TAQA said government-run utility company Abu Dhabi Water & Electricity Authority (Adwea) has raised its stake in the energy company to 74 percent from 52.38 percent.
Dubai's index extended on the 1.4 percent gains made on Monday to add 0.6 percent supported by gains in large and mid-sized shares.
Builder of the tallest tower in the world, Emaar Properties added 1.2 percent and Dubai Islamic Bank rose 1.8 percent.
In Qatar, the index rose 0.5 percent, recovering from some of the small losses made earlier in the day. Shares of Islamic lender Masraf Al Rayan jumped 3.2 percent; on Monday they fell 3.0 percent as its shares went ex-dividend.
But shares of Qatar International Islamic Bank dropped 4.5 percent as they went ex-dividend on Tuesday.
Egypt's index added a further 1.6 percent to 13,265 points with a little over two-thirds of the shares closing higher.
"Some positive momentum is building in the market again mainly because of inflow from foreign funds, and the market may test technical resistance at the January peak of 13,544 points," said a Cairo based technical trader.
Exchange data showed foreign funds were net buyers on Tuesday by a wide margin. Stocks, favoured by those international funds, outperformed with Commercial International Bank adding 2.7 percent.
Palm Hills Development rose 1.3 percent. Analysts at Prime Holding have increased their valuation of the company by 14 percent mainly because of an appreciation in price of the company's inventory and expected new unit launches.
The analysts also said they were positive on the short term cash flow of the company although they are cautious on the demand outlook, especially on the premium real estate market.
"A slowdown in sales activity is imminent and sooner than expected, with second quarter 2017 marking the official slowdown starting point in our view, as the current unit prices have appreciated to the level of demand elasticity ignition," said Prime Holding.
Saudi Arabia's index edged up 0.3 percent in the lowest daily traded volume since mid-September. Number of gaining and declining shares were equal at 66.
Dairy and juice producer National Agriculture Development jumped 4.0 percent, after it fell 2.1 percent the previous session.
The two listed real estate investment trusts - a security which provides investors with an extremely liquid stake in real estate - were some of the main laggards. Al Jazira REIT lost 2.9 percent and was the worst performer on Tuesday and Riyad REIT fell 1.8 percent.
* The index edged down 0.3 percent to 6,968 points.
* The index added 0.6 percent to 3,560 points.
* The index rose 1.8 percent to 4,549 points.
* The index edged up 0.5 percent to 10,392 points.
* The index added 0.2 percent to 7,016 points.
* The index rose 1.6 percent to 13,265 points.
* The index rose 0.5 percent to 5,623 points.
* The index edged up 0.05 percent to 1,349 points.
Additional reporting Stanley Carvalho in Abu Dhabi; Editing by Jon Boyle and David Evans