* First Saudi envoy named since Iraq's invasion of Kuwait
* Move precedes next month's Arab League summit in Baghdad
* Saudis worried over increasing Iranian influence in Iraq (Adds analyst comments)
By Patrick Markey
BAGHDAD, Feb 21 (Reuters) - Saudi Arabia, which has had uneasy relations with Iraq's Shi'ite-led government, has named an ambassador to Baghdad for the first time since Saddam Hussein invaded Kuwait in 1990, Iraqi Foreign Minister Hoshiyar Zebari said on Tuesday.
"For the first time since 1990, the Saudis have named an ambassador to Iraq. This is a very positive development," Zebari told Reuters, without elaborating.
Iraq is preparing to host an Arab League summit at the end of March that has been twice delayed by regional turmoil and acrimony between Baghdad and some Sunni Arab Gulf states over a crackdown by Bahrain's Sunni rulers on Shi'ite protesters.
The move to improve ties between Baghdad and Riyadh also comes as Sunni and Shi'ite powers jockey for position in the Middle East split along sectarian lines over the crisis in Syria and over Western sanctions on Iran.
Saudi Foreign Ministry spokesman Osama Nugali said: "We nominated our ambassador in Jordan as ambassador for Iraq as well, but he will not be residing in Iraq."
A successful summit in Baghdad would help restore Iraq's place in the Arab world and perhaps contribute to allaying Gulf states' concerns about Iran's influence in post-war Iraq.
Saudi officials had also said they feared the American military withdrawal would allow Tehran to increase its influence in Iraq under Shi'ite Prime Minister Nuri al-Maliki.
Saudi Arabia was alarmed when its U.S. ally's invasion of Iraq in 2003 brought Iranian-backed Shi'ite factions to power in elections after the overthrow of Saddam's Sunni-based rule.
Iraq also has strong ties to Syria, Iran's only Arab ally, which the Arab League has suspended over President Bashar al-Assad's violent suppression of an 11-month-old uprising.
Saudi commentators said the move appeared to be motivated mostly the country's desire to strengthen its relationship with Iraq before the Arab League summit. Iraq has long pressed Saudi Arabia to appoint an envoy to Baghdad.
"Iraq is going to host the Arab summit next month so there will be a great deal of diplomatic activity," Jamal Khashoggi, an influential Saudi commentator.
"Maybe this is our way of saying 'Okay, now we have an ambassador' without actually putting one there. But the security situation is not good."
Baghdad has often accused Saudi Arabia and Turkey of meddling in its affairs, especially after a 2010 election that kept Maliki in office under a power-sharing deal among Sunni, Shi'ite and Kurdish blocs.
That deal has been severely strained since U.S. troops withdrew in December and Maliki sought the arrest of a Sunni vice president and moved to oust a Sunni deputy premier. His actions prompted fears among Sunnis that the Iraqi leader was trying to consolidate his power further at their expense.
Saudi Arabia has also worried that the rise of Shi'ite power in Iraq could stir unrest among its own Shi'ite minority. For their part, Iraqi Shi'ite officials see a Saudi hand in autonomy demands in mainly Sunni border provinces.
"This is really part of the changes that have been taking place in the region, especially Syria," Saudi columnist Khalid al-Dakhil said. "This is part of the Saudis trying to keep their hands on the changes taking place in the region." (Addtional reporting by Angus McDowall; Editing by Alistair Lyon and Louise Ireland)