* Abu Dhabi's Dana jumps on hopes for Kurdistan legal action
* But most Abu Dhabi blue chips sag
* Dubai's DAMAC rises ahead of MSCI index inclusion
* Saudi petchems slip as oil falls below $51
* MSCI index constituents support Egypt
By Celine Aswad
DUBAI, May 31 (Reuters) - A sharp drop in property developer Ezdan Holding rippled across Qatar's stock market on Wednesday while profit-taking in blue chips dragged Abu Dhabi lower, although Dana Gas jumped on hopes for payments from the Kurdistan Regional Government (KRG).
Shares in Ezdan, Qatar's largest listed developer, tumbled by a further 9.3 percent. They have plunged since the end of last week, when shareholders gave preliminary approval for the company to delist.
The exchange said it had removed Ezdan from the QSE index after Monday's close because of the decision, but the steep drop soured sentiment toward other stocks.
"Investors are fed up as a result of the inaction of the regulatory authorities, the fact they did not reject the delisting of such a major company," said one regional investor. Qatar's stock index lost 1.6 percent.
Abu Dhabi's Dana Gas jumped 5.1 percent and was the most heavily traded share on the bourse.
An article on the website of Pearl Petroleum said Pearl, Dana and Crescent Petroleum had applied to a U.S. District Court for recognition and enforcement of awards made at the London Court of International Arbitration against the KRG.
The article said that documents associated with the U.S. court filing revealed Pearl was seeking another $26.5 billion in damages through a final phase of arbitration, which was expected to begin in September.
In a statement, the KRG said it would "continue vigorously to pursue its rights and defend its position". It has resisted legal efforts to make it pay Pearl for years, and it is not clear if the latest legal action will have a different result.
Profit-taking hit most Abu Dhabi blue chip shares, taking the index down 1.7 percent. First Abu Dhabi Bank retreated 3.7 percent, its biggest single-day decline since it was formed by a merger on April 1.
The Dubai index was almost flat as 12 shares gained ground and 19 declined. Small and mid-sized companies generally outperformed again, with Islamic Arab Insurance jumping 6.0 percent.
DAMAC Properties climbed 3.5 percent. It will be included in the MSCI emerging market index on Thursday, so passive index-linked funds were expected to flow into it on Wednesday.
In Saudi Arabia, large-cap banks outperformed with Banque Saudi Fransi adding 2.6 percent. The Saudi index was flat.
Oil shipper National Shipping Co (Bahri) rose 0.3 percent on news it had signed a joint venture agreement with state oil giant Aramco, London-listed Lamprell and South Korea's Hyundai Heavy Industries to build and operate a shipyard on the kingdom's east coast.
Petrochemical shares lagged as Brent oil futures continued a sharp decline, falling below $51 a barrel to a three-week low. Saudi Basic Industries lost 1.3 percent.
In Egypt, constituents of the MSCI emerging market index buoyed the local blue chip index, which climbed 0.8 percent. Commercial International Bank advanced 3.9 percent and Global Telecom Holding rose 1.4 percent.
Real estate developer Talaat Mostafa Group rose 2.7 percent and investment bank EFG Hermes, which will replace it in MSCI's emerging market index on Thursday, fell 1.9 percent. EFG had gained sharply and Talaat Mostafa had dropped since the index change was announced in mid-May.
* The index was unchanged at 6,871 points.
* The index edged down 0.03 percent to 3,339 points.
* The index lost 1.7 percent to 4,427 points.
* The index fell 1.6 percent to 9,901 points.
* The index rose 0.8 percent to 13,340 points.
* The index added 0.9 percent to 6,785 points.
* The index was flat at 1,320 points.
* The index rose 0.4 percent to 5,422 points. (Editing by Andrew Torchia and Pritha Sarkar)