* Royal decree boosts Saudi consumer shares
* General market confidence lifted, volume jumps to 7-week high
* Dairy producer Almarai up on Q1 results
* Other Gulf markets quiet
* Egypt corrects sharply
By Celine Aswad
DUBAI, April 23 (Reuters) - Saudi stocks rose in heavy volumes on Sunday as investors cheered news that King Salman had issued a royal decree restoring financial allowances for civil servants and military personnel, while Egypt fell steeply on profit taking.
The allowances were reduced last September as part of austerity measures due to low oil prices. Officials said on Saturday the cuts had been cancelled because of better-than-expected budgetary performance in the first quarter of 2017.
The move is likely to boost consumption, benefiting the retail and food sectors, according to economists at Riyadh-based Alrajhi Capital.
On Sunday consumer cyclical shares, which have been underperforming the market in the past year, were among the top gainers, helping push the index up 1.0 percent.
Electronics retailer Jarir surged 8.3 percent in its heaviest daily trading volume this year and home improvement retailer Saudi Company for Hardware (SACO) jumped 8.9 percent in unusually heavy trade.
Shares of the Gulf's largest dairy producer, Almarai , rose 1.7 percent after reporting a first quarter net profit of 328.3 million riyals ($87.55 million), up 13.7 percent from a year earlier. Four analysts polled by Reuters forecast a net profit of 337.4 million riyals.
Almarai attributed its improved results to better cost management, lower commodity costs and lower general expenses and said it will continue "to focus on costs control, efficiency gains and cash-flow preservation".
Other sectors such as banks, especially those exposed to the retail segment, are also likely to benefit from the restored allowance to the Saudi, the Alrajhi analysts said.
"The reversal of the allowance cut also highlights improved confidence in the economy, which is positive for the equities market in general," said Alrajhi Capital.
Analysts said, however, that other economic measures such as permitting only Saudi nationals to work at retail outlets, may lead to higher operating expenses in the near term while other fiscal policies, such as next year's introduction of value added tax, will likely hurt retailers' earnings.
Sunday also marks the first day of the Saudi stock exchange settling trades within two business days of execution, a practice called T+2, rather than the previous same day settlement.
In contrast to the Saudi market, other bourses in neighbouring Gulf states experienced a quiet day. Kuwait's index edged up 0.1 percent in below 10-day average volumes, while in Qatar the index lost 0.4 percent, with petrochemicals producer Industries Qatar dropping 1.8 percent as crude oil prices fell to a three-week low on Friday.
Stock markets in the United Arab Emirates were closed for a public holiday.
Cairo's index dropped 2.8 percent to 12,544 points, it largest single day decline since Jan. 23, as local traders exited positions with all but two of the 30 most traded shares declining, bourse data showed.
"Lack of fresh news has left the index vulnerable to a correction and this may continue, and it may test support at around 11,900 points," said a Cairo-based trader.
Cairo for Oil and Soap was the worst performer on Sunday, slumping 8.8 percent.
* The index rose 1.0 percent to 6,969 points.
* The index lost 0.4 percent to 10,197 points.
* The index dropped 2.8 percent to 12,545 points.
* The index added 0.08 percent to 6,819 points.
* The index flat at 5,475 points.
* The index edged up 0.2 percent at 1,337 points.
Editing by Clelia Oziel