DUBAI, Nov 3 (Reuters) - Stock markets in Egypt look set to rally in massive trading volume on Thursday after the central bank floated the Egyptian pound, traders and equity analysts said.

The central bank said it had floated the pound EGP= and hiked interest rates by 300 basis points to rebalance currency markets. Bankers told Reuters they had been informed that the central bank would set an initial guidance rate of 13 pounds to the dollar at a sale at 1300 local time (1100 GMT), compared to the previous official rate of 8.88 pounds.

The central bank also said in a statement that it would abolish the priority list for imports and phase out monetary financing of the budget deficit over coming months. ID:nC6N18200Y

"This is very encouraging news. The stock market would love this news because the bottleneck has finally been relieved," said a Dubai-based analyst.

An equities trader in Cairo said: "There is a wave of buy orders we are receiving at the moment. I think this will outdo the rally in March."

In mid-March, the central bank devalued the pound to 8.85 per dollar from 7.73 and simultaneously pumped nearly $200 million into the dollar-starved banking system. The stock market rallied 6.7 percent in very heavy trade that day.

Economists believe a more flexible exchange rate mechanism could help unlock billions of dollars in foreign investment.

The Dubai analyst, however, said that some foreign investors were likely to remain cautious about putting money into Egypt for now until they saw how well Egyptian authorities managed the float, and because of uncertainties overhanging emerging markets such as the U.S. presidential election.

(Reporting by Celine Aswad; Editing by Andrew Torchia) ((Celine.Aswad@thomsonreuters.com;))

Keywords: EGYPT STOCKS/

DUBAI, Nov 3 (Reuters) - Most Gulf stock markets moved little early on Thursday but Qatar's index fell after it broke technical support while Saudi Arabia's bourse continued to outperform the region.

Gulf markets showed little reaction to a big monetary policy change in Egypt, where the central bank said it had floated the pound EGP= and hiked interest rates by 300 basis points. This triggered a surge in Egyptian stocks at the opening. ID:nL8N1D42FI

Qatar's stock index .QSI sank 1.1 percent to 9,966 points after slipping 1.3 percent on Wednesday to 10,073 points; that broke technical support at 10,153-10,160 points, where the September low coincided with the 200-day average.

Fund managers have expressed concern about high valuations in Qatar and a Reuters poll published this week found them on balance expecting to cut allocations to that market in the next three months.

The Saudi index .TASI rose 0.6 percent, however, in a broad-based rally supported by both banks and petrochemical firms.

Market sentiment has been positive since last month's $17.5 billion international bond issue by the government eased pressure on liquidity in the banking system.

Investors largely ignored a purchasing managers' survey showing growth in the Saudi non-oil private sector slowed to its lowest level in October since the survey was launched in August 2009. ID:nL9N1AF011

Savola 2050.SE , a big Saudi food company whose profits have suffered in the past from currency weakness in Egypt, fell 0.3 percent.

Dubai's stock index .DFMGI edged up 0.2 percent, although Gulf Navigation GNAV.DU jumped 7.0 percent, and Abu Dhabi .ADI fell 0.1 percent.

(Reporting by Andrew Torchia; Editing by Jon Boyle) ((andrew.torchia@thomsonreuters.com)(+9715 6681 7277)(Reuters Messaging: andrew.torchia.thomsonreuters.com@reuters.net))

Keywords: MIDEAST STOCKS/