Dubai also extended losses to reach a 14-month low and Qatar declined, but other markets rose, led by Saudi Arabia, tracking gains in global equities and oil.

The Dubai index slipped 0.05 percent to 1,513 points.

The Qatari benchmark declined 0.8 percent to 6,669 points.

Zain fell 3.4 percent. Analysts forecast the stock would rally ahead of an expected dividend from its $9 billion African asset sale, completed on Tuesday. However, this payout will not be made until 2011, the firm said, and would be between 200 and 240 fils per share.

The stock had been suspended since May 30, pending the distribution of its 2009 annual dividend.

"Today, people received their cash from the 2009 dividend, but everyone was expecting the stock to rally - even if it had gone limit up, the yield on the likely 2011 dividend would be amazing," said a Kuwait trader who asked not to be identified. "There's talk a large shareholder was selling, which made smaller investors follow."

Investors also booked profits in other Kharafi group companies that had surged in the wake of Tuesday's deal.

National Industries Group. fell 4.8 percent and National Investments Co. dipped 2.7 percent. Kuwait's index fell 0.8 percent to be within five points of a 2010 low.

"Zain had a trickle down effect on the rest of the market - other group companies fell, which made the investment firms that hold shares in them to also decline," the trader added.

Saudi Arabia gained for a third day as rising oil prices boosted sentiment in the world's top crude exporter. Saudi Basic Industries Corp. (SABIC) climbed 2.6 percent.

"Volumes are dropping off a little in Saudi Arabia and it is tracking oil perfectly, much more so than it did in the past," said Matthew Wakeman, EFG-Hermes managing director for cash and equity-linked trading.

With oil's direction dictated by world markets, it means Saudi stocks are also following global trends, Wakeman added.

The Tadawul All-Share index (TASI) rose 1.85 percent to 6,110.98 points on Wednesday with gains across all sectors. Gains ranged from 0.11 percent in the Media & Publishing to a gain of 7.21 percent in the Energy &Utilities sector. Wednesday’s overall market breadth was also strongly positive, with 94 advancers beating out 31 decliners with an AD ratio of 3.03. In Wednesday’s positive market, the top gaining company was Al-Ahlia Insurance Company, which saw an increase of 9 percent, while the top decliner was Solidarity Saudi Takaful Co., which saw a loss of 2.79 percent, the Financial Transaction House (FTH) said in its daily market commentary.

Wednesday’s liquidity also saw a positive improvement, coming in at SR4.55 billion, supporting a day of steady gains, holding the market above the 5-day moving average for a third consecutive gain, the FTH report said.

The EGYPT index climbed 0.6 percent to 6,348 points.
 
— With input from agencies