By Ateeq Shariff

Sept 18 (Reuters) - Most stock markets in the Gulf were mixed on Wednesday as some caution crept in over the size of an expected U.S. interest-rate cut in the Federal Reserve's monetary policy announcement later in the day.

A 50-basis-point rate cut, as expected by investors, will be key in further driving global risk appetite. However, economists favouring a 25-bps cut argue that the current state of the U.S. economy doesn't warrant a bigger move.

Market expectations on the size of a U.S. rate cut have been volatile of late, with only a 14% chance of a 50-bps cut priced in as of exactly a week ago, according to CME's FedWatch Tool.

The Fed will detail its September rate verdict at 1800 GMT.

Monetary policy in the Gulf Cooperation Council (GCC) often aligns with the Fed's decisions as most of the regional currencies are pegged to the U.S. dollar.

Saudi Arabia's benchmark index .TASI gained 0.3%, helped by a 4.3% increase in Saudi Awwal Bank 1060.SE.

The Saudi market is seeing the start of Arabian Mills' initial public offering, following the successful IPO of Al Majed Oud, said Joseph Dahrieh, Managing Principal at Tickmill.

"The strong IPO activity is expected to boost liquidity, attract investors, and help diversify the market, potentially stimulating economic growth and encouraging more listings."

Dubai's main share index .DFMGI eased 0.1%, hit by a 1% fall in blue-chip developer Emaar Properties EMAR.DU.

In Abu Dhabi, the index .FTFADGI closed 0.1% lower.

Oil - a catalyst for the Gulf's financial markets - fell after two sessions of gains after an industry report showed increasing U.S. crude and fuel inventories, offsetting rising tension in the Middle East and the potentially bullish impact of a U.S. interest rate cut.

Outside the Gulf, Egypt's blue-chip index .EGX30 0.6%, with Ezz Steel Co ESRS.CA advancing 9.1%.

(Reporting by Ateeq Shariff in Bengaluru
Editing by Keith Weir)

((AteeqUr.Shariff@thomsonreuters.com; +918061822788;))