Meanwhile, Saudi Basic Industries Corp. SABIC) makes its largest decline for eight-months as oil slips below $70, spurring nervy investors to ditch petrochemical stocks.

SABIC falls 5.4 percent, its biggest decline since Aug. 17 to slump to a 10-week low, while Rabigh Refining and Petrochemical Co. loses 3.3 percent.

“The main theme driving the market down is oil after it broke below $70,”” says Youssef Kassantini, an independent financial analyst. “The market was due for a correction after rising significantly since March 2009.”

Meanwhile, Dubai’s index slumped to a 10-week low.

The benchmark dropped 1.7 percent to 1,686 points, its lowest close since March 11. Volumes slumped to a two-week low, so selling pressure is not extreme, but a lack of buyers is weighing on the market.

“Markets are falling mostly on concerns about the second tier consequences of euro weakness and lower levels of demand for Middle East products,” says Zahed Chowdhury of Al Mal Capital.

“This essentially means energy and petrochemical products, but a declining euro could also be negative for the regional property sector. “ “A good chunk of demand comes from the euro zone,” says Chowdhury.

Oman’s index fell 1.3 percent to 6,510 points, its lowest finish since Feb. 8. Bank Muscat  drops 2.5 percent and Bank Sohar dipped 3.4 percent.

Commodity-related stocks also tumbled as worries the euro crisis would derail a global economic recovery weigh on prices. Oman Cables Industry fell 6.1 percent. 

Qatar’s index dropped 2.3 percent to 7,085 points, its biggest decline since Dec. 1. “

Industries Qatar fell 3 percent and Commercial Bank of Qatar lost 3.3 percent. 

Kuwait’s index fell 0.7 percent to 7,075 points. Gulf Finance House plunged 8.3 percent to its lowest level for more than two years on renewed concerns over the firm’s viability.

“GFH has been falling consistently because of its liquidity and capital issues and there are serious doubts it can carry on as a company, so investors are getting out of the stock,” adds Global’s Hameed.