The Dubai and Abu Dhabi indices dipped for a second day. Just before market close, Reuters reported that Dubai World debts were $39.9 billion as of Dec. 31, citing the conglomerate's restructuring document.

This lack of openness will deter foreign money, Sarwar said, limiting a recovery in Dubai asset values, with the emirate's house prices down about 50 percent from 2008 peaks. "Global investors have many attractive destinations and Dubai is competing with these - unlike Kuwait or Saudi Arabia, Dubai relies on foreign investment," Sarwar added.

The Dubai index dropped 0.6 percent to 1,485 points. The Abu Dhabi index fell 0.3 percent to 2,496 points.

Emirates NBD and Abu Dhabi Commercial Bank - both members of a Dubai World creditors' committee - fell 1.6 and  2.3 percent respectively after being in the red for most of trading. 

Saudi Arabia's Tadawul All-Share Index (TASI) fell 0.28 percent to 6,001.24 points, a new 11-week low. The sector activity for the day was mostly negative with 13 out of 15 sectors closing with losses ranging from 0.03 percent by the Petrochemical Industries sector to 1.13 percent by the Agriculture & Food Industries sector. On the other hand, the 2 gaining sectors were Energy & Utilities and Media and Publishing with respective gains of 0.24 percent and 0.96 percent. The overall market breadth for the day was negative with 34 advancers against 86 decliners giving it an AD ratio of 0.395, the Financial Transaction House (FTH) said in its daily market commentary.

Technically, the Saudi market is bearish, said Youssef Kassantini, an independent analyst, with the next major support at 5,250 points and an intermediate prop at 5,750.

Samba Financial Group fell 1.7 percent and Rabigh Refining and Petrochemical Co. lost 0.7 percent. 

BMG's 30-share Saudi Index depreciated by 0.2 percent in Wednesday's session to reach 313.22 points. The value of traded shares went up compared to that of the previous session by 2.8 percent to SR1 billion, whereas the total number of shares traded descended by 5.2 percent to 43.5 million shares.

Meanwhile, Tadawul announced on Wednesday that Rasmala Investment Saudi CJSC has become a duly licensed, approved and authorized member firm of Tadawul, with the right to conduct brokerage services and deal as principal and agent in the Saudi Stock Exchange.

The Kuwaiti index fell 0.1 percent to 6,673 points. Kuwait's Gulf Bank rose 1.9 percent to a 22-month high, with investors confident a 30 billion dinar ($103.9 billion) government spending plan will translate into a risk-free profit boom for domestic lenders.

Newspaper reports last week said the government would provide half the money for the spending plan, with the remainder financed by state-backed bank loans.

"I think (banks) will continue to outperform in the coming days," said Essa Al-Hasawi, assistant manager at Zumorroda Investment Co. in Kuwait. "This plan would mean 3 billion dinars per year of bank lending divided between nine banks, which will push up sector earnings. Many people believe we won't see banks trading at current prices again."

The Qatari index fell 0.8 percent to 7,146 points.

The Omani index dropped 0.2 percent to 6,281 points.

The Bahraini index rose 0.7 percent to 1,434 points.
 
- With input from agencies