Other Middle East markets were mixed, with Oman, Dubai and Egypt declining, while Kuwait and Qatar extended gains. 

The Tadawul All-Share Index (TASI) slipped 0.4 percent, trimming its week-to-date gains to 2.6 percent. The index closed at 6,216.7 points. The sector activity for the day was mostly negative with 12 out of 15 sectors closing with losses ranging from 0.02 percent by the Transport sector to 1.84 percent by the Hotel and Tourism sector. The 3 gaining sectors were Media & Publishing, Multi-Investment, Insurance with respective gains of 0.90 percent, 1.03 percent and 1.69 percent. The overall market breadth for the day was negative with 43 advancers against 82 decliners giving it an AD ratio of 0.52, the Financial Transaction House (FTH) said in its daily market commentary.

The liquidity for the day dropped to SR2.5 billion as compared to Sunday's SR3.29 billion.

Abu Dhabi's Aabar Investments fell 1.4 percent to 1.41 dirhams after the firm offered minority investors 1.45 dirhams a-share as part of its plan to delist from the bourse. This is a big discount on a $2 billion convertible bonds sale shareholders approved in May, which were priced at 2.5 dirhams-a-share.

Some investors are selling now rather than wait for Aabar to buy the shares, with the delisting - first proposed in June - seen as inevitable.  

"This won't be taken well by minority shareholders because the stock was quite beaten up after the delisting announcement," said Matthew Wakeman, EFG-Hermes managing director for cash and equity-linked trading. 

"It's hurting sentiment among minority shareholders and is putting the market under pressure."

Abu Dhabi's index was almost flat at 2,527 points, but Dubai fell 0.2 percent to 1,503 points, its first loss for three days.

Kuwait's index rose 1 percent to a July high after a government minister was quoted as saying the country's sovereign wealth fund was ready to inject money into the stock market.

"I don't see this rise being sustained - the market will remain volatile," said Essa Al-Hasawi, assistant manager at Zumorroda Investment Co. in Kuwait. 

Industries Qatar climbed 1.5 percent, bolstered by recent oil price gains to help Doha's benchmark reach a two-week high, although volumes remain lackluster. 

"The Qatar market is trading at an average P/E of about 10 and most companies are making good profits, so stocks are undervalued, but the problem is that no new money is coming into the market," said Thamer Gadallah, head of investments at Almana Group.

Investors are instead repositioning their existing portfolio, he said, because they fear further shocks to global markets as the US economy falters and the euro zone debt crisis rumbles on.
   
- With input from agencies