* Saudi banks rally on bond issue

* SEC jumps on strong Q3 profit

* STC gains on in-line profit, Mobily drops on loss

* Hokair tumbles on earnings slump

* Dubai's DXBE jumps for third day before theme parks open

By Celine Aswad

DUBAI, Oct 20 (Reuters) - Saudi Arabia's stock market rose sharply on Thursday as banks rallied after the kingdom's mammoth international bond sale, which could help to unclog liquidity bottlenecks in the economy. Egypt bounced as investors bought into recent dips.

The Saudi index .TASI gained 2.3 percent in sharply higher turnover as all but one of the banks advanced, with Samba Financial 1090.SE , which earlier this week had reported a drop in third-quarter net income, jumping 5.2 percent.

The kingdom conducted the world's largest emerging market bond sale on Wednesday, selling $17.5 billion of debt in the government's first international offer while attracting investor orders totalling almost four times that amount. urn:newsml:reuters.com:*:nL8N1CP3CQ

"This issuance is a very welcome development for the Saudi equity market and the banking sector in particular," said Mohamed Eljamal, director of capital markets at Abu Dhabi's Waha Capital.

"One of the main issues facing the banking sector in Saudi is the tight liquidity in the system and the high loan-to-deposit ratio - this issuance should directly help relieve some of this liquidity pressure."

Finance Minister Ibrahim Alassaf said in a televised interview that state payments to construction firms would increase in the coming period and that delays in the payments were merely due to "technical reasons". Eljamal said this could soften the blow to bank earnings from souring construction sector loans.

Other stock market sectors were mainly driven by quarterly earnings announcements. Real estate developer Jabal Omar 4250.SE , which depends heavily on government projects, jumped 6.0 percent after posting a quarterly net profit of 691 million riyals ($184.3 million) ompared to a loss of 127 million riyals a year ago.

Saudi Electricity 5110.SE jumped 5.9 percent after its third-quarter net profit rose 50.8 percent to 4.40 billion riyals; NCB Capital had forecast 1.90 billion riyals.

Saudi Telecom 7010.SE rose 2.3 percent to 54.75 riyals after reporting quarterly profit of 2.15 billion riyals, down 7.5 percent year-on-year but in line with forecasts.

Alrajhi Capital said the results were "positive" and "STC continues to prove its resilience in the current tough market environment, an indication of the strength of its business compared to peers." It kept an "overweight" rating on the stock with a target of 70 riyals.

But rival Etihad Etisalat 7020.SE (Mobily) slumped 6.3 percent after reporting a net loss of 167.7 million riyals versus a loss of 158.3 million riyals in the year-earlier period. Analysts had forecast a profit of 15.06 million riyals.

Savola Group 2050.SE gained 2.1 percent despite reporting a 53.3 percent drop in third-quarter net profit and announcing that it would again halve its quarterly dividend.

But Rabigh Refining and Petrochemical 2380.SE dropped 5.4 percent after reporting a narrower net loss of 217 million riyals compared with a year-ago loss of 460 million riyals.



UAE MIXED, EGYPT REBOUNDS

Elsewhere, Dubai's index .DFMGI closed 0.6 percent higher with DXB Entertainments DXBE.DU rising 4.5 percent in active trade. But neighbouring Abu Dhabi's index .ADI pulled back 0.3 percent with blue chip First Gulf Bank FGB.AD falling 0.9 percent as investors booked profits.

In Doha, the index .QSI fell 0.1 percent. Commercial Bank COMB.QA , which reported a net loss earlier this week, slipped a further 1.3 percent.

Egypt's index .EGX30 bounced 1.4 percent but still closed down 3.0 percent for the week.

Heliopolis Co for Housing HELI.CA , which fell 0.6 percent on Wednesday after reporting a 47.9 percent drop in quarterly net profit, rebounded 8.1 percent.

Juhayna Food Industries JUFO.CA rose 0.5 percent after reporting a 34 percent drop in third-quarter net profit; chairman Safwan Thabet told Reuters that dollar shortages and the company's decision not to fully pass on higher import costs to the consumer were the main reasons for the decline. The company's sales jumped 10.9 percent for the quarter.



THURSDAY'S HIGHLIGHTS



SAUDI ARABIA

* The index .TASI surged 2.3 percent to 5,652 points.



DUBAI

* The index .DFMGI rose 0.6 percent to 3,340 points.



ABU DHABI

* The index .ADI fell 0.3 percent to 4,294 points.



EGYPT

* The index .EGX30 added 1.4 percent to 8,277 points.



QATAR

* The index .QSI fell 0.1 percent to 10,438 points.



KUWAIT

* The index .KSWE rose 0.1 percent to 5,321 points.



OMAN

* The index .MSI declined 0.6 percent to 5,562 points.



BAHRAIN

* The index .BAX added 0.7 percent to 1,152 points. (Editing by Andrew Torchia and Andrew Heavens) ((celine.aswad@thomsonreuters.com; +971562247653; Reuters Messaging: celine.aswad.thomsonreuters.com@reuters.net))