Disappointing US housing data also weighed on investor sentiment as oil prices fell for a second straight session on Wednesday after US industry data showed a surprise jump in crude and gasoline stocks.

Still, Dubai's index rose 0.6 percent to 1,551 points, largely thanks to property developer Deyaar, which surged 13.7 percent on heavy volumes.

"This is due to local buying where small stocks see huge volumes, it's short-term trading," said Musa Haddad, head of MENA equity desk at National Bank of Abu Dhabi.

Other property stocks also contributed to Dubai's rise, with Emaar Properties gaining 1.2 percent.

Abu Dhabi's index was flat, inching up just 0.01 percent higher to 2,551 points.

"There aren't really any drivers, the second quarter may be better, we may see some good results from companies like Air Arabia, Emaar Properties and First Gulf Bank," said Julian Bruce, EFG-Hermes director of institutional equity sales.

"Overall many are still cautious on the banks, Dubai World still hasn't been booked as non-performing loans so there is a bit of overhang there," he added.

In Abu Dhabi, investors' attention went to Aabar and Dana Gas, which advanced 4.8 percent and 2.9 percent respectively.

Aabar rallied on talk that the company could buy back shares at the conversion price set for their bonds sale.

Dana Gas had announced a 10-percent share buyback.

Stock markets in Oman, Saudi Arabia, Kuwait and Qatar fell.

Traders said investors were reluctant to build positions at this time in anticipation of the second-quarter results which are expected to start coming out next month.

"We believe the lack of commitment from the investment community will continue till the corporates start reporting the Q2, 2010 results," said Osama Ibrahim Al-Qinna, head of brokerage at Oman Arab Bank.

Saudi stocks ended lower, led by Saudi Basic Industries, which closed 0.5 percent lower.

The Tadawul All-Share Index (TASI) fell 0.32 percent to close at 6,343.47 points with only one sector posting gains. The only Cement sector saw a gain of 0.27 percent. Sector losses ranged from 0.05 percent in the Real Estate Development sector, to a loss of 0.44 percent in the Banks & Financial Services sector. Overall market breadth was negative, with 35 advancers and 80 decliners recording an AD ratio of 0.44, the Financial Transaction House (FTH) said in its daily market commentary.

The value of Saudi traded shares dropped to SR 3.28 billion on Wednesday.

The Qatari measure fell 0.2 percent to 7,072 points. The Omani measure declined 0.6 percent to 6,173 points. The Kuwaiti index fell 0.3 percent to 6,653 points. The Bahraini index edged 0.5 percent higher to 1,413 points.
 
— With input from agencies