DUBAI, July 2 (Reuters) - Qatar's stock market dropped in early trade on Sunday as a deadline for Doha to accept a series of political demands by four Arab states was expected to expire late in the day with no sign of the crisis ending.

Qatari Foreign Minister Sheikh Mohammed bin Abdulrahman al-Thani said at the weekend that the demands were made to be rejected. He insisted Qatar would not close a Turkish military base or shut Doha-based satellite channel Al Jazeera.

The four Arab states have warned they may impose further sanctions if Qatar does not comply; they did not give details, but bankers believe, for example, that Saudi, United Arab Emirates and Bahrain banks might receive official guidance to pull deposits from Qatar.

Doha's stock index was down 2.0 percent after 45 minutes of trade as all 18 companies with a value above $1 billion dropped. Constituents of the MSCI emerging market index were some of the worst performers, with Vodafone Qatar down 4.1 percent.

On June 22, the last day on which the market traded before closing for a week-long Eid al-Fitr holiday, foreign funds were net buyers of Qatari shares for the first time since the crisis erupted on June 5.

Saudi Arabia's index was nearly flat early on Sunday as it reopened after Eid. It had risen sharply between June 20 and 22 on news that international index compiler MSCI had placed Riyadh on a watch list for upgrade to emerging market status and that the architect of Saudi economic reforms, Prince Mohammed bin Salman, was named crown prince.

Some of the recent top performers fell because of profit- taking on Sunday, with property developer Emaar the Economic City dropping 2.4 percent.

Medical insurer BUPA Arabia rose 1.5 percent after the company said it had renewed its insurance contract with blue-chip petrochemical producer Saudi Basic Industries . BUPA expects the contract to have a positive impact on 2017 net earnings, but it did not give a monetary value.

Dubai's index was down 0.3 percent, hit by a 1.2 percent decline in Dubai Islamic Bank. In neighbouring Abu Dhabi the index was also dragged lower by banking shares; Union National Bank was down 1.1 percent. (Reporting by Celine Aswad; Editing by Andrew Torchia and Dale Hudson)