LISBON (Reuters) - Portuguese insurance company Fidelidade, controlled by China's Fosun, said on Tuesday it decided not to proceed with the initial public offering (IPO) of its healthcare arm Luz Saude due to capital markets instability and tensions in the Middle East.

Fidelidade announced two weeks ago plans for an IPO of Luz Saude on Lisbon's stock exchange, which would include selling a minority stake and a capital increase of 100 million euros ($107.03 million).

($1 = 0.9343 euros)

(Reporting by Sergio Goncalves; Editing by Catarina Demony)