Market bellwether Emaar Properties fell 2.3 percent, weighing on the benchmark.

"Today was mainly a weak day, and we saw selling pressure on most stocks despite the turnaround in the US and Europe on Tuesday," said Marwan Shurrab, vice president and chief trader at Gulfmena Alternative Investments.

"There is a lack of interest from institutional investors in putting in new positions. This is expected due to the lack of liquidity in the market and lack of news as regards issues with Dubai debt."

A scarcity of liquidity also led to muted trading on the Abu Dhabi bourse but the index managed to end higher, helped by banking stocks.

"Stocks still trade below the important resistance levels and can remain bearish until any clear reversals are seen," said Shiv Prakash, equity analyst at MAC Capital Advisors.

"There is no fresh flow of funds as yet in the markets; lower supports are seen at 2,430 points."

National Bank of Abu Dhabi rose 1 percent and First Gulf Bank climbed 1.7 percent.

Mohamad Hawa, a senior analyst at Credit Suisse said he preferred Abu Dhabi-based banks NBAD and FGB as they had low exposure to Dubai debt and high capital reserves.

However, banking stocks in the UAE are likely to come under selling pressure as earnings seasons nears. Moody's said in a recent report it was keeping a negative outlook on UAE banks because of asset quality concerns.

Markets in Saudi Arabia and Kuwait also rose, reversing some losses from the previous session, in a sign that volatility on the regional bourses is the current norm and gains might not be sustainable.

"We expect further selling in the market, as investor confidence continues to be weak and the summer holidays are just around the corner," said Jasem Al-Zeraei, head of institutional sales at NBK Capital, about the Kuwaiti bourse.

Saudi Basic Industries Corp. (SABIC) rose 0.5 percent and helped lift the index, though the market saw buying momentum easing as the session wore on.

The Tadawul All-Share Index (TASI) closed 0.36 percent higher at 6,346.44 points. However, 6 of the 15 market sectors did close Wednesday with losses which ranged from 0.09 percent in the Cement sector to a loss of 0.75 percent in the Energy & Utilities sector. Sector gains ranged from 0.21 percent in the Banks & Financial Services sector, to a gain of 1.13 percent in the Telecom & IT sector. Overall market breadth was neutral with a miniscule positive bias, with 64 advancers and 63 decliners recording an AD ratio of 1.02, the Financial Transaction House (FTH) said in its daily market commentary.

The liquidity for Wednesday's market saw a minimal dip, coming in at SR3.90 billion.

Analysts said the fundamentals of the Saudi market are a factor of optimism

"At the current stage, investors are focusing on risk more than earning, and [if] we talk about blue chips stocks, investors are buying those stocks even with high PE valuation," said Hisham Tuffaha, head of investment research at Bakheet Investment Group.

The Kuwaiti index inched 0.2 percent higher to 6,542 points.

"In addition, the Saudi economy has very attractive level of debt and GDP growth is expected to hit 3 percent."

The Qatari index advanced 0.7 percent to 7,029 points. The Omani measure slipped 0.1 percent to 6,097 points.
 
- With input from agencies