Midnight, under a starry desert sky. At the poolside nightclub of a hotel in the shadow of the great pyramid of Cheops, 200 diners have finished their meal and are waiting for the entertainment.

They are the participants and guests and camp followers of the Cairo International Film Festival, and a few outsiders who can afford the $55 tickets to the awards dinner, so the organizers want to give them the best. Who else but Nagwa Fuad, queen of the belly dance?

There is no bigger star in Egyptian show business, the most sophisticated in the Arab world outside prewar Beirut. For this occasion she is called back from vacation because no one else will do.

Barefoot, her auburn hair flying, the slit in her green and gold skirt revealing her powerful legs, she bounds and whirls around the floor. Her hips gyrate in he familiar belly dance movement but the steps and rhythms are far removed from those of the rolypoly dancers of Arabian Nights caricature. Nagwa Fuad has modernized and westernized the belly dance, evolving a personal style that her detractors scorn but tourists and nightclubbers seem to love.

She is the featured dancer in the nightclub at the Cairo Sheraton, the most expensive in town, playground for high rollers from Saudi Arabia and the Persian Gulf.

According to Rashad Mourad, the hotel's public relations director, "She has made an evolution in dancing and we try to put her in an atmosphere that is respectable. It's not just shaking her belly for the drunks or the ones who want to pick up women. In fact, we don't like the title belly dancer. We use the title oriental dancer. Belly dancer is for cheap dives," of which Cairo has plenty, all featuring dancers who aspire to Nagwa Fuad's position of prominence.

Of course there are snipers, those who say she is past her prime, who say she holds her post as the Sheraton because she married the hotel's general manager. There are those who say she was just another mediocre dancer until a lover with influence made her a star, those who remember her when she was a walleyed secretary to the suspected king of Cairo's pornographic film makers.

But Fuad has no time for all that - she's too busy dancing, choreographing her act, and now making movies. Her latest, "A Thousand And One Kisses," is playing in downtown Cairo.

"As a dancer you have to retire at a certain age," she said. "I have put European influences in my dances. They're very different from the traditional ones, and I want to preserve them on film for people in the future to see."

Partly because of her work and partly because of Mahmoud Reda, choreographer of the state-sponsored folklore dancing troupe at Cairo's "Balloon Theater," Egyptian dancing has changed more in two decades than in centuries. It horrifies the purists, but Reda says it's only good show business.

"The minute you take a dance out of the village and put it on the stage it begins to change," Reda said. "If you want the real thing you have to go back 50 years. In the village, the traditional dance was nonotonous and repetitive. But it's different on the stage. The audience pays for tickets and you can't just repeat the same movements over and over."

Belly dancing in nightclubs is still not considered a respectable profession in Egypt's class-conscious society. A young woman like Farida Fahmy, featured dancer of Reda's troupe, would never work the clubs because she is the daughter of a university professor. "I have had many offers and the money is much better, but I cannot do it," she said.

Nor would she sit on Henry Kissinger's lap as Nagwa Fuad is said to have done.

But Nagwa Fuad has gone beyond the innuendo that follows young women trying to succeed in the entertainment business. She has made it. She's a star, a household name. There are Egyptian men who would not permit their wives to visit her apartment, but it's now all right to be seen talking to her at a cocktail party.

She says she is "not very rich," and has occupied the same Cairo apartment for 17 years, but she lives like a queen by Egyptian standards.

It has been a long road for Fuad, who says she is 36. She was born in Egypt but her mother was a Palestinian, and she lived in Palestine before the creation of Israel. She says her family came to Egypt as refugees in 1948 and she can remember the poverty-stricken life of a refugee camp near the Suez Canal.

For here, dancing was a natural way up, like country "singing for a poor girl from Tennessee.

"There are two kinds of dancers," she said. "There are the ones who are born to it and the ones who learn it through practice. I'm the first kind, born to dance. It's a rare thing, a gift from Allah."

And dance she does, two shows a night at the Sheraton, on the movie set in the daytime, at special shows and command performances. In between she does her choreography, works on her costumes and chooses her music. That must make her one of the hardest-working people in Egypt, where the workday of the literate classes is about five hours, but she says it's no hardship.

"I love my work, you know? Any day I don't dance is a day I am sick. I am a professional," she said.