Dubai Financial Market drop to an eight-week low while Abu Dhabi, Kuwait and Qatar also decline
Dubai's bourse tumbled to an eight-week low as retail investors cut risk after the United States moved a step closer to launching military action against Syria.
The index slumped 3.7 percent to close at 2,397 points, its lowest finish since July 11.
Leaders of the US Senate Foreign Relations Committee have reached an agreement on a draft authorization for the use of military force in Syria, paving the way for a vote by the committee on Wednesday.
"Everything is in risk-off mode and given the scale of the fall, this is retail investors staying cautious," said Amer Khan, fund manager at Shuaa Asset Management.
"These are headline-driven fears as local fundamentals haven't changed. Even if there is a strike, it will not be allowed to get out of hand because that would be a problem for the whole world."
Bluechips will outperform in coming sessions as investors rotate out of speculative names into those that have strong earnings growth. Stocks like Emaar Properties, Dubai's largest developer, is looking attractive at current levels, Khan said. Shares in Emaar fell 3.2 percent to 5.3 dirhams.
Small and mid-cap stocks were among the biggest fallers on Wednesday. Air Arabia and Dubai Financial Market slumped 6.2 percent, with Arabtec Holdings and Dubai Investments down 5.6 and 5.3 percent respectively.
Elsewhere, Abu Dhabi's benchmark fell 2.3 percent to 3,648 points, Kuwait's bourse slipped 2.6 percent to 7,268 points and Qatar's measure retreated 2 percent to 9,348 points. Saudi Arabia's index was 1.7 percent lower at 7,697 points.
Gulf markets underperformed the MSCI emerging market index , which ticked up 0.2 percent.