Property developers and banks head declines on Abu Dhabi's bourse and Dubai's benchmark dips for a second day since Sunday's 32-month high, but low volumes suggest selling pressure is muted.
Shares in National Bank of Abu Dhabi and Abu Dhabi Commercial Bank slip 1.3 and 0.9 percent respectively.
Aldar Properties, which hit a 23-month intraday high on Monday, drops 5.4 percent to extend losses since it agreed a merger with Sorouh Real Estate.
Once the merger is approved by shareholders, Sorouh will delist from the market and shareholders will be paid 1.288 Aldar shares for every Sorouh share. The swap ratio is seen by some analysts as in favour of Sorouh investors.
"The offer values Sorouh at AED2.10 per shares - on the face of it, this is actually quite a good deal for the Sorouh minority shareholder, since our Fair Value for Sorouh as a stand-alone company amounts to AED2.33 per share," NBK Capital says in a note.
"Given the uncertainties surrounding the still-declining Abu Dhabi real estate market, a discount of just 10 percent to our Fair Value does not seem unreasonable."
The Abu Dhabi government will own a 37 percent stake in the new firm and will also pay Sorouh AED3.2bn in exchange for some infrastructure assets and units in its The Gate development.
This is not being factored into the fair value of Sorouh and the market is overlooking the value, NBK adds.
Sorouh shares, which rallied to their highest close since December 2010 on Monday, ease 0.6 percent.
Abu Dhabi's benchmark slips 0.9 percent to close at 2,754 points, down for a second session since Sunday's 26-month high.
Dubai's benchmark dips 0.5 percent to finish at 1,777 points. It is testing long-term technical resistance between 1,778 points - the 2012 high hit in March last year - and an October 2010 peak of 1,793 points.
"The market looks overbought - it reached similar levels around this time last year and stayed there for a while," says Amer Khan, fund manager at Shuaa Asset Management. "From that perspective it can only stay overbought for a little while."
Emaar Properties and Drake & Scull slip 0.7 and 1.2 percent respectively.
The market trades 110m shares, compared to Sunday's 445m shares.
Elsewhere, Qatar's measure climbs 0.2 percent to 8,623 points and Oman's benchmark ticks up 0.1 percent to 5,837 points.
Kuwait's index advances 0.3 percent to 6,191 points.