Agility's shares fell 7.8 percent. It stands accused of overcharging the US army millions of dollars on supply contracts in Iraq, Kuwait and Jordan.

Agility had rallied on Monday after it posted a 22 percent rise in fourth-quarter profit and proposed a 40 fils dividend.

Kuwait's index fell 0.8 percent, its largest loss in eight weeks.

Saudi Arabia's Tadawul All-Share Index (TASI) made a sideways neutral close on Tuesday. Sector closes were leaning toward a more negative tone, the Financial Transaction House (FTH) said in its daily market commentary.

Six of the market sectors closed with gains, while nine showed losses. Sector gains ranged from 0.02 percent in retail to 1.05 percent in petrochemical industries, and losses ranged from 0.05 percent in the multi-investment sector to 1.71 percent in the energy and utilities sector.  The overall market breadth was negative, with 52 advancers and 76 decliners recording an AD ratio of 0.68, FTH said.

Riyad Bank dropped 3.8 percent, extending losses since it reported below-forecast earnings.

Qatari Masraf Al-Rayan climbed 3.3 percent to an 18-month high after its quarterly profit rose.

"Masraf's results were very good and its assets grew faster than expected," said Keith Edwards, head of asset management at Doha-based investment company The First Investor.

"Masraf's numbers might not be significant in terms of expectations for other banks -- they dance to the tune of QNB."

Qatar National Bank (QNB) climbed 0.6 percent, hitting a 20-month intraday peak, a week after posting a 25 percent rise in first-quarter profit.

Industries Qatar was up 1.6 percent. The index rose 0.8 percent to its highest close since Oct. 22, 2008.

"Fundamentals look good -- the banks will benefit from Qatar's infrastructure spending and Industries Qatar is underpinned by its expansion plans and an improving global economy," said Edwards.

Dubai Financial Market fell 1.5 percent after Shuaa Capital slashed its price target on the stock on a lower turnover forecast and implied weaker revenues.

-- With input from agencies