UPDATE 8: Property firm slumps in Dubai while Kuwait dragged by Zain.
Dubai's index ended higher as stocks rallied from the previous day's seven-week closing low, but further volatility is expected as the UAE's results season gets underway.Emaar Properties rose 1.7 percent and Arabtec climbed 3.4 percent.
Union Properties dropped 5.6 percent, extending losses since Credit Suisse slashed its price target on the stock to 0.03 dirhams from 0.80 dirhams.
The index climbed 0.6 percent to 1,565 points, trimming its losses to 13.2 percent this year.
Abu Dhabi Commercial Bank rebounded from an initial drop to end flat, a day after reporting a fourth-quarter loss on record provisions, helping Abu Dhabi's index ease away from Tuesday's seven-week closing low.
ADCB ended flat, recovering early losses.
"I believe this is just pure speculation - the results should have had a negative effect on the stock," said Samer al-Jaouni, General Manager of Middle East Financial Brokerage Co.
"There was technical pressure on the stock for a couple of days and it could have just been a technical rebound."
The index edged up 0.1 percent to 2,602 points.
Kuwait's index suffered its largest one-day decline for more than three weeks as bellwether Zain slumped to a 35-week low on earnings fears.
Zain fell 5.3 percent to its lowest finish since May 25.
"Expectations for Q4 earnings are weighing heavily on Zain and there is some serious selling pressure is coming through," said Shahid Hameed, Global Investment House head of asset management for the Gulf region.
On Saturday, affiliate Zain Saudi Arabia said it was in talks with creditors after it failed to honour some commitments linked to an Islamic Murabaha loan.
"Zain Saudi Arabia looks like it could be in serious financial difficulty and there are expectations it could have to recapitalise, which is adding to the negative sentiment on Zain," Hameed said.
"Zain is a bellwether stock and so whenever it comes under pressure the rest of the market does too."
National Industries Group (NIG) fell 7.5 percent after Moody's Investor Services downgrades the Kuwait firm, maintaining a negative outlook.
The index fell 1.3 percent to 6,975 points, its largest one-day loss since January 4.
Bahrain's measure rose 0.2 percent to 1,474 points.
Oman's index hit a 10-day high as banks and cement firms rose with investors betting increased government spending will boost these sectors.
Raysut Cement climbed 2.3 percent after reporting a slight rise in full-year profit.
Bank Muscat advanced for a second day since reporting four-quarter earnings, adding 1.6 percent. Rival lender Bank Dhofar climbed 4.5 percent.
"Oman has an insulated economy, which did reasonably well last year, while its banks have provided good disclosures on their provisions," said Jithesh Gopi, head of research at SICO investment bank.
"Bank Muscat has cleaned up its balance sheet probably except for Dubai exposure, which is seen as a positive by investors."
The index rose 1.2 percent to 6,518 points.
"Oman public spending is increasing and there are enough internal dynamics to keep the country moving forward. The Dubai shock is likely to have only a minor impact," Gopi added.
Saudi Arabia's index ended lower for a second day, slipping to a three-week low as bluechips suffered minor declines.
Saudi Basic Industries Corp (SABIC) fell 0.6 percent and Saudi Telecom Co dropped 0.7 percent.
SABIC has fallen 2.8 percent in two sessions as investors belatedly react to a 10-percent, three-week slide in oil prices.
The index fell 0.1 percent to 6,253 points, its lowest finish since Jan. 5. (Reuters)