Abu Dhabi bourse's announcement that the country has met all requirements for an MSCI emerging market upgrade fails to boost sentiment and Dubai hits a three-week low.
"The effect of an MSCI inclusion will only be felt in the medium-term, when international funds begin allocating," says Sleiman Aboulhosn, assistant fund manager at Al Masah Capital.
Dubai's index ended 0.7 percent lower at 1,607 percent, its lowest close since April 13.
Air Arabia fell 1.6 percent after first-quarter net profit missed analyst estimates and fell 14.6 percent.
Emaar Properties slipped 1.5 percent. The developer hired consultant McKinsey to conduct a strategic review of its international operations.
Neighbouring Abu Dhabi's benchmark also booked losses, as four of top ten largest stocks fell.
Property stocks Aldar Properties and Sorouh Real Estate weigh, slid 2.5 and 1.4 percent respectively.
Oman International Investment Co lifted Muscat's index as investors are upbeat on a possible listing of its unit Oman Arab Bank.
The stock added 1.6 percent and the benchmark ends 0.1 percent higher to 6,339 points, just shy of Monday's two-week high.
"Oman Arab Bank's listing could create value unlocking story in Ominvest -investors are betting on that," says Kanaga Sundar, head of research at Gulf Baader Capital Markets.
"Index will continue to trade sideways in the coming days, as volumes remain considerably lower this week."
Bank Muscat fell 0.7 percent, extending decline after Standard and Poor's downgraded its Bahrain affiliate Bank Muscat International on Tuesday, citing its weak operating performance.
Elsewhere, small capital stocks drove Kuwait's index to a higher close as speculators dominate.
Al Safwa Group and Abyaar Real Estate rose 2.6 and 4.2 percent respectively.
The benchmark added 0.3 percent to 6,516 points, recovering declines of past two sessions.
Kuwait's government said it would soon announce a new cabinet after three ministers resigned over questioning.
Traders say this would not help the lacklustre trade. "The market is unfazed by political turmoil. It has seen so much that it is normal," says a Kuwait-based trader on terms of anonymity.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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