* Saudi telcos Zain, Atheeb surge
* Saudi Ground Services continues rise but well off high
* Salama Insurance sinks on rights issue
* TAQA climbs 5.7 pct but gives up some gains
* Banks weigh on Qatar
By Andrew Torchia
DUBAI, July 1 (Reuters) - Gulf stock markets were mixed on Wednesday as retail investors bought shares on dips but concern about the Greek debt crisis and weak oil prices prevented any major gains. Abu Dhabi National Energy Co surged on merger hopes.
The Saudi Arabian index fell in early trade but closed 0.2 percent higher. Telecommunications operator Zain KSA added 5.3 percent, while Atheeb Telecom rose 1.7 percent in unusually heavy trade.
Zain has been strong since Sunday, when rival Etihad Etisalat (Mobily), whose shares remain suspended, said it had decided to increase provisions for "Zain account receivables" by 800 million riyals ($213 million).
Mobily is embroiled in a 2.2-billion-riyal dispute with Zain Saudi over the application of a 2008 contract under which Mobily would provide domestic roaming and site-sharing services to its rival. Its decision to take provisions over the dispute could indicate a positive outcome for Zain.
Saudi Ground Services, which listed last Thursday after an initial public offer at a price of 50 riyals per share, climbed a further 1.4 percent to 74.00 riyals and was once more the most heavily traded stock.
It came well off its intra-day high of 80.25 riyals, however, after passing levels which analysts see as fair value; SICO, for example, has a target price of 74 riyals.
Salama Cooperative Insurance plunged 35 percent to 19.00 riyals after announcing plans for a rights issue between July 1 and 28. Shareholders will be entitled to buy 1.5 new shares for every share held, at a price of 10 riyals.
Kingdom Holding fell 1.0 percent in thin trade after its chairman, billionaire Prince Alwaleed bin Talal, said he would donate $32 billion to charity in coming years.
He said this would include assets inside and outside Saudi Arabia, including his personal stake in Kingdom Holding, currently 95 percent according to exchange data. He added, however, that there would be no impact on the company's share price or his investment strategy from his actions.
Dubai's market also dropped in early trade but closed 0.1 percent higher as Amlak Finance, the most heavily traded stock, climbed 0.4 percent.
Abu Dhabi slid 0.6 percent as blue chips First Gulf Bank and Etisalat lost 1.0 percent and 0.7 percent respectively.
But TAQA closed 5.7 percent higher at 0.74 dirham, off a high of 0.80 dirham, after sources familiar with the matter told Reuters that Abu Dhabi might merge the company into another state-owned business to make its debt more manageable and try to turn around its performance. TAQA declined to comment. The stock has declined from 1.58 dirhams in December 2013.