UPDATE 7: Stocks rebound from five-week lowsi, while Saudi index also ends higher.
Dubai's index ended a six-session losing streak as stocks rebounded from five-week lows, but late selling pressure eroded much of these gains to underline fragile investor sentiment.Arabtec climbed 4.3 percent, Emaar Properties rose 1.2 percent and Dubai Financial Market added 2.4 percent. These three were among the biggest casualties of Dubai's recent slide, each falling 15 percent or more since January 7, the last day's trading before Arabtec agreed to sell a 70 percent stake to Aabar Investments in a deal that will dilute existing holdings.
"People are trying to get direction from the market and turnover remains low -- there's a lack of interest from institutions so it's day traders trying to benefit from volatility, rather than investors trying to build positions," said Marwan Shurrab, vice-president and chief trader at Gulfmena Alternative Investments.
"Today's move was mainly down a rebound in Saudi Arabia yesterday, which strengthened sentiment at the pre-open."
The index climbed 0.9 percent to 1,688 points after being up as much as 2 percent intraday.
"The market has been hit heavily at the start of the year and we're now seeing a slight rebound to more appropriate levels where valuations still look attractive," added Shurrab.
Abu Dhabi's index climbed 0.2 percent to 2,670 points as Aldar Properties rose 2.7 percent.
Saudi Arabia's index ended higher for a third day as banks rose, while Saudi Electricity Co (SEC) surged.
The utility jumped 6.6 percent as investors speculated on its likely fourth-quarter results. SEC is forecast to report a loss of 338 million riyals, according to analysts polled by Reuters.
Al-Rajhi Bank climbed 0.7 percent to close at 74.00 riyals, recouping the previous day's decline. On Sunday, it reported a slight rise in quarterly profit, missing estimates.
Saudi Basic Industries Corp (SABIC) slipped 0.3 percent as investors booked profits from the previous day's 15-month closing high.
The index climbed 0.2 percent to 6,409 points. Kuwait's index ended lower for the first session in three as banks slid after National Bank of Kuwait said it will increase its capital by 10 percent and the entire board of Commercial Bank of Kuwait resigns.
NBK fell 1.8 percent and CBK dropped 3.1 percent. Gulf Bank and Ah Ahli Bank lost 1.7 and 2 percent respectively.
"NBK is the third or fourth bank to go for a capital increase -- the banks are doing this to avoid capital adequacy isuses, heightening worries about banks' provisions," said a Kuwait-based trader who asked not be identified.
"It will also draw liquidity from the market when liquidity is already tight, but it's positive in the longer term."
The index dropped 0.3 percent to 6,997 points as volumes fell by nearly half from the day before.
"The market will be range bound in 2010 because most of the results from the bank sector will be disappointing throughout the year," said Shahid Hameed, Global Investment House head of asset management for the Gulf region.
"I'm expecting provisions to be a dampener on bank earnings for the whole of this year, which will keep bank stocks in their current narrow range. This means the market should move up about 5-10 percent for the year."
Banks recouped most of the previous day's losses to help Qatar's index make its largest gain for more than a month, easing away from a seven-week low.
Qatar National Bank climbed 1.6 percent, Commercial Bank of Qatar rose 1.8 percent and Doha Bank surged 4.7 percent.
The index climbed 1 percent to 6,755 points for only its second gain in seven sessions and its largest since December 14, but volumes slumped to a two-week low.
Bahrain's measure fell 0.3 percent to 1,468 points. Muscat's index ended lower for a fourth session as institutions dumped bluechip stocks including Oman Telecommunications Co (Omantel), although this selling pressure receded as the session close neared.
"This was technical selling pressure and nothing to do with fundamentals -- the market went up strongly at the start of the year, but since then has started to stabilise on falling volumes," said Adel Nasr, United Securities brokerage manager.
"Many of the bluechips rebounded towards the end of the session and I don't think it will continue."
National Bank of Oman shrugged off an initial slump to end 0.9 percent higher after reporting a 38 percent fall in quarterly profit. This was below expectations, but was also already priced into the stock, analysts said.
Larger rival Bank Muscat also advanced, climbing 0.5 percent, but Omantel dropped 1.6 percent.
"Institutions were selling Omantel and this will probably continue for the next 1-2 days," added Nasr.
The index fell 0.9 percent to 6,473 points. It has fallen for four sessions since hitting a 12-week closing high on January 12.
Bank Dhofar was the biggest drag, falling 1.4 percent, while Raysut Cement dropped 2.8 percent.
Saudi Arabian Mining Co (Maaden) rose after its fourth-quarter profit nearly doubles, while Etihad Etisalat (Mobily) also advanced after reporting record earnings, limiting losses on Saudi Arabia's index.
Maaden climbed 2 percent as its quarterly profit surges 183 percent.
Mobily rose 1 percent. The telecoms operator reported a 35 percent rise in fourth-quarter profit.
The index slipped 0.2 percent to 6,398 points, giving up initial gains.