"Investors wait for more confirmation there is a sustainable recovery," said Matthew Wakeman, EFG-Hermes managing director for cash and equity-linked trading.

"As in recent weeks, we correlate more on the downside than on the upside," he added.

Kuwait's benchmark declined 1.3 percent to 6,654 points.

Qatar's index, by contrast, rose for a third consecutive session, gaining 1.5 percent to 7,025 points, reaching its highest level since May 23.

The country's banks, led by Masraf Al-Rayan, all posted gains, after Moody's in a report on Monday said the outlook for Qatari banks is stable.

"This reflects the Qatari banks' solid franchise development in a strong macroeconomic environment and a highly supportive banking system, but also captures the challenges faced by the banks in maintaining good credit quality fundamentals and earnings in this small concentrated market," the report said.

The Tadawul All-Share Index (TASI) closed 1.24 percent higher at 6,340.03, hitting a four-week high, on the back of higher oil prices and as local investors took advantage of low valuations, boosting several blue chips.

Sector gains ranged from a 0.06 percent in the Media & Publishing sector to a gain of 2.10 percent in the Energy & Utilities sector. The Hotel & Tourism sector fell 0.29 percent on Monday. Overall market breadth was strongly positive, with 115 advancers beating out 15 decliners, recording an AD ratio of 7.67, the Financial Transaction House (FTH) said in its daily market report.

The value of Saudi traded shares was over SR3.96 billion on Monday

Dubai and Abu Dhabi indices fell 0.4 percent to 1,523 points and 0.3 percent to 2,527 points respectively.

The UAE central bank chief said the domestic economy will grow at a pace of 4 percent in 2010 and 2011 due to large-scale infrastructure spending.

Moody's, however, in a report on Monday said the credit environment for corporate issuers in the GCC region will remain challenging, especially for corporates that need to address significant debt maturities by 2012.

In the following days, trading is expected to remain subdued, although the approach of the second-quarter earnings season may trigger some price changes.

"I believe we're going to see a week with very little changes, some sideways movements," said Samer Al-Jaouni, general manager of Middle East Financial Brokerage Co.

"Next week we'll see some more movements as we're nearing the end of the second quarter and some may change or liquidate positions," he said.

The Omani measure fell 0.7 percent to 6,096 points. The Bahraini index rose 0.4 percent to 1,404 points.

The Egypt index slipped 0.01 percent to 6,300 points.
 
— With input from agencies