MIDEAST STOCKS-Most Gulf shares in red on regional uncertainty, shipping concerns

By Ateeq Shariff

Sept 24 (Reuters) - Most Gulf equity markets closed lower on Thursday as little progress in US-Iran diplomacy and persistent risks to Strait of Hormuz shipping unsettled investors.

Concerns mounted after Mohsen Rezaei, secretary of Iran's Supreme National Security Council, warned in a state television interview on Wednesday that, should neighbouring countries cooperate with Washington to halt Iranian flights, Tehran would ensure their airports "cannot function."

Despite continued diplomatic engagement, divisions between Tehran and Washington over ending the conflict remain substantial.

A senior Iranian official told Reuters on Wednesday that diplomacy must continue, even as Iran's president told the UN General Assembly that the country would not yield to US pressure.

Geopolitical uncertainty continued to disrupt shipping through the Strait of Hormuz, where 10 commodity vessels transited on Wednesday, up from 7 a day earlier but well below the 10-day average of about 17.

Saudi Arabia's benchmark index .TASI dropped 0.8%, hit by a 2% slide in Al Rajhi Bank 1120.SE.

Dubai's main share index .DFMGI was down 0.4%, with top lender Emirates NBD ENBD.DU losing 2.5%.

In Abu Dhabi, the index .FTFADGI fell 0.6%.

GCC stocks were pressured as investors watched US-Iran talks and the prospect of reopening the Strait of Hormuz. Slow progress, weak shipping traffic, and ongoing maritime disruptions kept risk sentiment subdued, said George Pavel, general manager at Naga.com.

Meanwhile, the UAE central bank on Wednesday suspended Iran's Bank Melli from operating in the country, underscoring deteriorating ties between the two nations since the US war on Iran began in February.

The Qatari index .QSI retreated 0.7%, with the Gulf's biggest lender Qatar National Bank QNBK.QA losing 1%.

Outside the Gulf, Egypt's blue-chip index .EGX30 slipped 0.8%.