UPDATE 4: Dubai's benchmark index DFM ends lower for a fourth day in five.
Saudi Arabia's index TASI advanced for a third day as rising oil prices boosted sentiment in the world's top crude exporter.
Saudi Basic Industries Corp (SABIC) added 2.6 percent, Samba Financial Group climbed 4.6 percent and Al-Rajhi Bank climbed 1.7 percent.
Saudi Electricity Co surged 7.9 percent, taking its gains to 22 percent since saying it would raise tariffs, while just before market close the utility said it would sign a $1.47 billion loan to finance a new power plant.
The index rose 1.9 percent to 6,111 points. Oil was up 2 percent at $73.46 a barrel at 1240 GMT.
Dubai's benchmark DFM ended lower for a fourth day in five, slipping to a 14-month low as volumes also slumped, indicating investors believe there is further downside.
Dubai Investments Co fell 1.6 percent and Arabtec lost 1 percent.
"Because of the global headwinds, a lot of people think the upside locally is limited so people are happy to sit out the market," said Matthew Wakeman, EFG-Hermes managing director for cash and equity-linked trading.
"Volumes are dismal - people think they won't miss much if there is an upside, but the downside could be much heavier.
"Everyone is waiting to see if the euro zone comes out with some decisive action - there is no domestic news flow."
The index slipped 0.05 percent to 1,513 points, its lowest finish since March 18, 2009. Volumes hit a three-month low.
Abu Dhabi's index ADI edged up 0.02 percent to 2,525 points.
Worldwide, investors are also awaiting a European Central Bank meeting on Thursday to see if it will announce fresh steps to ease strains from the euro zone's debt crisis.
The ECB is also expected to publish a new set of economic forecasts for the region which are likely to signal somewhat stronger activity, despite worries that debt problems and government austerity measures will sharply brake growth.
Banks were the main drag as Qatar's index QSI fell for a third day in four in the absence of local catalysts to attract buyers, while ongoing international volatility is also deterring investors across the Gulf Arab region.
Qatar Islamic Bank fell 0.7 percent and Commercial Bank of Qatar dropped 0.6 percent.
Industries Qatar edged up 0.1 percent, bolstered by a rise in oil prices and strong Chinese export data, with the stock seen as a proxy for world trade.
The index fell 0.3 percent to 6,803 points.
Bahrain's measure BAX slipped 0.2 percent to 1,412 points.
Zain falls after resuming trade following a 11-day suspension, and weighs on Kuwait's index <.KWSE>, which ends within five points of Sunday's 2010 closing low.
Zain dips 3.4 percent. The stock had been forecast to rally ahead of an expected dividend from its $9 billion African asset sale, completed on Tuesday.
However, this payout will not be made until 2011, the firm said, and would be between 200 and 240 fils per share. [ID:nSGE6570D2]
The stock had been suspended pending the distribution of its 2009 annual dividend.
"Today people received their cash from the 2009 dividend, but everyone was expecting the stock to rally - even if it had gone limit up, the yield on the likely 2011 dividend would be amazing," says a Kuwait trader who asked not to be identified.
"There's talk a large shareholder was selling, which made smaller investors follow."
Investors also book profits in other Kharafi group companies that had surged in the wake of Tuesday's deal. National Industries Group falls 4.8 percent and National Investments Co dips 2.7 percent.
"Zain had a trickle down effect on the rest of the market - other group companies fell, which made the investment firms that hold shares in them to also decline," the trader adds.
The index falls 0.8 percent to 6,669 points.
A slight pick-up in world stocks following strong Chinese export data lifted Oman's index MSI to a higher close, with regional markets moving in tandem with their global peers.
Galfar Engineering was the standout performer, rising 3.5 percent and accounting for more than a quarter of all shares traded.
Oman Telecommunications Co (Omantel) added 0.8 percent, but Oman International Bank dropped 3.6 percent.
"It's a worldwide story - all markets are flat on low volumes and today's slight rebound is following global sentiment," said Adel Nasr, United Securities brokerage manager.
"The low volumes show people aren't confident a rebound can be sustained and there are fears there will be further losses in Europe and the U.S., which would be repeated here."
The index climbed 0.2 percent to 6,114 points, within 40 points of Sunday's 2010 low.
European shares pushed higher on Wednesday, tracking gains in most Asian equity markets, as news of strong Chinese exports sparked a tentative return of risk appetite while the euro stabilised. (Reuters)