UPDATE 6: Dubai's index DFM ends lower for the seventh session in eight.
Saudi Arabia's index TASI ended lower for the first session in four, tracking losses in regional and global markets, with investors booking profits from Kingdom's 12-week closing high on Monday.
Saudi Electricity Co fell 1.2 percent and Zain Saudi Arabia dropped 1.4 percent after each reported disappointing fourth-quarter earnings.
Kingdom Holding slid 2.9 percent as investors cashed in gains from a four-session, 42 percent surge.
The index fell 0.6 percent to 6,369 points.
"A lot of money went in Saudi Arabia last year because international funds were finally able to trade that market, and I think Saudi will continue to attract money, as will Qatar and to some extent Abu Dhabi," said Richard Frost, head of research sales at Al-Futtaim HC Securities.
This flow may be limited, however, until the global economy shows more convincing signs of recovery, said Frost.
"In bear markets, Western GEM (general emerging market) funds will move their money to more liquid and mature markets until there's a firm reason to move back into less liquid frontier markets such as the Gulf. I think we'll need more time for this to happen," he added.
Dubai's index ended lower for the seventh session in eight, slumping to a six-week low as investors cashed in the previous day's gains.
Abu Dhabi's measure slumped to the same milestone, underlining investor anxiety over corporate earnings in the UAE.
Arabtec fell 3.3 percent, Emaar Properties dropped 3.2 percent and Dubai Financial Market and Drake & Scull each lost 2.4 percent. This quartet accounted for more than two-thirds of all shares changing hands on the index.
"People are eying Saudi results and are expecting the same for UAE companies, which is increasing the negativity," said Chamel Fahmy, Beltone Financial regional senior sales trader.
Saudi Arabia's bank earnings have broadly missed estimates, although the Kingdom's investors have taken lenders' increased provisions as a positive, enabling banks to start afresh in 2010.
Confidence among UAE investors is more negative, analysts say, in part because of worries about banks' exposure to Dubai World, which has asked for a standstill on billions of dollars of debts, while projections for the Saudi economy are much more bullish than for the UAE and Dubai in particular.
The index fell 1.6 percent to 1,662 points, its lowest close since December 10.
Abu Dhabi's benchmark fell 0.9 percent to 2,656 points, its sixth decline in seven sessions. Abu Dhabi National Energy Co (Taqa) dropped 3.3 percent and Sorouh Real Estate dropped 3.8 percent.
Commercial Bank of Kuwait made its largest gain for seven months, recouping the previous day's losses following the resignation of its board and helping Kuwait's index end higher for the third day in four.
CBK surged 4.3 percent, its largest one-day rise since June 21.
"Commercial Bank's major shareholder has strongly supported its stock, and the resignations give it bigger control," said Naser al-Nafisi, general manager for Al Joman Center for Economic Consultancy in Kuwait.
CBK shares have fallen 32 percent since the start of 2008, while Kuwait's banking index has declined 42 percent over the same period. Al Sharq Holding Co has a 23 percent stake in CBK, according to Reuters data.
National Bank of Kuwait dropped 1.8 percent, falling for a second day since saying it wants to increase its capital by 10 percent.
The index climbed 0.2 percent to 7,012 points.
"The market will move sideways until companies declare their full year results," added Nafisi.
Raysut Cement rallied, helping Oman's index edge higher despite declines in its two largest stocks.
Raysut climbed 2.2 percent. Oman Cables Industry rose 0.1 percent after being up 5.4 percent intraday. The firm reported a 4.3 percent rise in annual profit in 2009, according to a statement posted on the Muscat bourse website before market hours.
Bank Muscat dropped 0.5 percent. Oman Telecommunications Co (Omantel) fell 1.9 percent, taking its losses to 2.8 percent since Oman's government said it might revive a plan to sell a 30 percent stake in the telecoms operator.
The index edged up 0.05 percent to 6,477 points, ending a fourth session losing streak. On January 12 it reached a 12-week closing high. Losers outnumbered gainers 12 to eight.
Commercial Bank of Qatar jumped 3.3 percent in early trading after its fourth-quarter profit rose 33 percent.
The bank's profit missed analysts' foreceasts, but it rose despite taking a QR170m hit related to a corporate default.
Qatar's bourse was up 0.4 percent at 6,781 points. (Reuters)