Most Middle East markets edged higher as investors gave a muted response to overnight gains on US exchanges and upbeat Asian trade as major benchmarks hit 2-3 month highs.

Orascom fell 2.7 percent. Algerian unit, Djezzy, is Orascom's biggest single source of revenue, so an import ban would hit sales during the upcoming Ramadan and Eid seasons, a traditionally busy period for mobile phone operators.

"This news is extremely negative. An import block at this peak season is a disaster for Orascom's third and fourth quarter results," said a trader, speaking on condition of anonymity. The Egypt index rose 0.2 percent to 6,317 points.

Saudi Basic Industries Corp. (SABIC) fell 1.1 percent, having hit a three-week high in early trade.

"Petrochemical Q2 numbers weren't great and people are still worried about what the next few months hold in terms of the global economic climate," said a Riyadh-based analyst who asked not to be identified. 

Etihad Etisalat dropped 2.3 percent. 

Zain Saudi Arabia and Saudi Telecom Co. slid 0.6 and 0.3 percent respectively.

The Tadawul All-Share Index (TAS) fell 0.49 percent to 6,301.35 points. The sector activity for the day was negative with 10 out of 15 sector closing with losses ranging from 0.16 percent by the Real Estate Development sector to 1.44 percent by the Telecommunication & Information Technology sector. On the other hand, the gaining sectors ranged from 0.29 percent by the Hotel and Tourism sector to 1.65 percent by the Media and Publishing sector. The overall market breadth for the day was also positive with 51 advancers against 75 decliners giving it an AD ratio of 0.68, the Financial Transaction House (FTH) said in its daily market commentary.

Dubai's index ended a three-session losing streak as bellwether Emaar Properties climbed 2.1 percent. The Dubai index rose 1.2 percent to 1,528 points.

"We're seeing a muted response to gains on global markets overnight - volumes are still low and we're correlated more to the downside than the up," said Matthew Wakeman, EFG-Hermes managing director for cash and equity-linked trading. 

"There isn't much international cash coming back in and that is keeping a lid on prices."

Industries Qatar (IQ) rose 2.4 percent, its largest gain for nearly two months to help Doha's index hit a new six-week high. The index rose 1 percent to 7,104 points. 

Qatar National Bank climbed 1.3 percent and Commercial Bank of Qatar added 2.2 percent. 

"Total bank earnings were above expectations and were up compared to the first quarter and also year-on-year, giving investors something positive to trade on," said Mohamed Abu Ghoush, head of equities brokerage at Ahli Bank.

Zain hit a 10-week intraday peak after an industry source told Reuters that Abu Dhabi-listed Emirates Telecommunications Corp. (Etisalat) had signed a non-disclosure agreement to study Zain's assets. More than 10 million Zain shares were traded, a seven-week high as it ended flat.

The Kuwaiti index climbed 0.2 percent to 6,638 points.
 
- With input from agencies