They said some investors from the oil-rich region were eyeing bargain U.S. stocks, while others were looking to European markets, but few were expected to bring their funds back home.

     "Gulf investors are not speculators. They are long-term investors who have seen many economic downturns and upturns," Saud al-Saleh, general manager of Saudi Investment Bank <1030.SE>, told Reuters.

     The biggest vote of confidence in the U.S. economy came on Monday from Saudi billionaire Prince Alwaleed bin Talal as U.S. markets reopened for the first time since the attacks on September 11.

     "It would be very foolish and a big blunder to sell at this time. With deep regret for all that has been going on, there is a great opportunity to buy," said the prince, whose net worth is independently estimated at $20 billion.

     "Those with a five to 10-year horizon, if they invest today they will not be sorry," added the prince, famed for high-profile international investments in media, banks, hotels, autos, real estate and technology.

     As expected, U.S. stock markets plunged on Monday, with investors shrugging off another interest rate cut by the Federal Reserve.

     Gulf governments and wealthy individuals have poured much of their investments in the West, particularly U.S. markets.

     Economists could not provide an exact estimate for private Gulf Arab assets abroad, but said they stood at hundreds of billions of dollars.

     NO REPATRIATION OF FUNDS

     "They (Gulf investors) are sophisticated enough to ride this out and not make panic decisions," a Western economist said. "Some are even toying with the idea of seeing this as a buying opportunity."

     Saeed al-Sheikh, chief economist at Saudi Arabia's National Commercial Bank, said that any migration of Gulf investment from U.S. markets would benefit Europe and Asia.

     "Some might come to the local stock market, but not a significant amount because the regional market is not big enough," Sheikh said.

     Gulf Arab markets, buoyed by high oil prices, were set to reverse last year's dismal performance after recent rallies propelled Saudi and Qatari stocks to record highs and allowed others to recoup losses.

     But some Gulf stock markets have been hit since the attacks, as economists said there was concern over the role countries in the region would play in a proposed U.S.-led coalition against terrorism.

     The biggest markets in Saudi Arabia and Kuwait fell 7.2 and eight percent, respectively, but a Kuwait Central Bank interest rate cut triggered a four percent rally on Tuesday, brokers said.

     "The war declared by the United States is only a stone's throw from us," said Beshr Bakheet of Bakheet Financial Advisors. "Political instability is going to affect sentiment."