UPDATE 5: Shares in investment bank fall 7%, while most Gulf exchanges decline.
Kuwaiti shares, which have fallen in all but one of the last 10 trading days, dropped more than 1 percent as investors cash out of shares on fears that financial firms will post weak earnings.
Global Investment House fell 7.04 percent, leading declines among investment and banking stocks, on news the firm has defaulted on most of its debt.
"Investors have very low expectations for earnings for the fourth quarter and the first quarter since many companies have high exposure to the stock markets," said Talal al-Loghani, portfolio manager, GCC, at Noor Financial Investment Co.
"The more bad news we get about Global and the more time it takes to resolve, the more people will expect other companies to suffer from similar problems."
The government set up a multi-billion-dirham fund last month to invest in shares for the long term, in an effort to stabilise the market, rather than prop it up. Investors had "higher expectations" regarding the funds.
Saudi Arabia's main index rose in early trading, boosted by chemical shares.
The benchmark, which ended a nine-day rally on Saturday, gained 0.21 percent to 5,171 points. Saudi Basic Industries Corp (SABIC) rose 1.33 percent.
Saudi Arabian Fertilizers Co - which dropped 6.44 percent on Saturday - gained 1.85 percent. The firm said on Sunday fourth-quarter profit fell 28 percent, missing analysts' expectations.
Qatar's main index, which has fallen more than six percent this year, declined in early trading steered by Industries Qatar, while banking shares weigh on Bahrain's measure.
The Doha index, which has fallen in three of the last four trading days, shed 0.5 percent to 6,399 points. Industries Qatar loses 1.44 percent.
In Bahrain, Ithmaar Bank retreated 9.3 percent and Gulf Finance House dropped 3.61 percent. The index was down 0.49 percent to 1,771 points.
Emaar Properties shares declined more than four percent in early trading, leading an almost two-percent fall on the main index.
Emaar dropped 4.13 percent, pushing the index - which tumbled more than 70 percent last year - down 1.85 percent to 1,697 points. Dubai Islamic Bank fell 6.15 percent.
Abu Dhabi's index reversed earlier gains as retail investors booked profits in stocks that had rallied in the past two weeks on institutional buying.
The measure was down 0.45 percent at 2,516 points, having risen as high as 2,542 points earlier.
Sorouh Real Estate, which advanced almost 47 percent in the last eight trading days, retreated 7.3 percent. First Gulf Bank, up 8.65 percent this year, shed 6.87 percent.
Oman Telecommunications Co (Omantel) led gains on the main index as investors bet that companies will post strong fourth-quarter profits.
Omantel jumps 4.82 percent. Two analysts in a Reuters net profit survey last month said they expected Omantel's quarterly profit to rise between 14.7 and 21.5 percent.
The main index gained 1.04 percent with Oman International Bank rising 4.27 percent and Bank Muscat 0.38 percent.
Gulf Arab markets were likely to extend declines as pressure from depressed oil prices, weak economic data in the West and ongoing violence in the Gaza strip better investor sentiment.
Oil prices fell towards $40 a barrel on Friday and U.S. and European stocks retreated on data showing steep U.S. job losses in December. Saudi Arabia's index ended a nine-day winning streak on Saturday, falling 3.04 percent. (Reuters)For all the latest market 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.