Zain shares fell 1.4 percent to 1.400 dinars.

After market hours, Zain board member Sheikh Khalifa Ali Al-Khalifa Al-Sabah told Reuters that Al-Fawares Holding, which he said owns about 4.5 percent in Zain, had filed a court case against opening the firm's books to Etisalat.

"We do not know what the decision of the judge would be, but expect this would at least postpone the deal," said Naser Al-Nafisi, general manager for Al-Joman Center for Economic Consultancy in Kuwait.

Major Zain shareholder Kharafi group is the main player in a plan to sell a controlling Zain stake to Etisalat. This is priced at 1.700 dinars per share, but will not be done on a pro rata basis, leading to protests from other big shareholders.

Zain's shares are up 11 percent since the deal was agreed in late September.

A Zain spokesman told Reuters: "Zain management does not comment on the actions of shareholders or board of directors."

The Kuwaiti index fell 0.6 percent to 6,851 points.

Saudi Basic Industries Corp. (SABIC) climbed 1.2 percent, as oil price gains boosted Saudi petrochemical stocks, but banks were mixed.

"Petrochemicals stocks will be affected by volatility on international markets," said Saleh Al-Onazi, vice-president of principal investment at Swicorp in Riyadh.

Samba Financial Group fell 2.2 percent, while SABB dropped 1 percent after Goldman Sachs cuts its price target on the lender.

The banking index slipped 0.2 percent, taking its losses to 7.1 percent since Sept. 25.

The Tadawul All-Share Index (TASI) rose 0.42 percent to 6,344.88 points. The sector activity for the day was mostly positive with 9 gaining sectors against 5 losing sectors. The gaining sectors ranged from 0.15 percent by the Retail sector to 1.44 percent by the Petrochemical Industries sector. On the other hand the losing sectors ranged from 0.04 percent by the Industrial Investment sector to 0.99 percent by the Media and Publishing sector. The Energy & Utilities sector had no change. The overall market breadth for the day was positive with 87 advancers against 37 decliners giving it an AD ratio of 2.35, the Financial Transaction House (FTH) said in its daily market commentary. The liquidity for the day reached SR2.47 billion.

Dubai's index made its largest gain in three weeks. The benchmark rose 1.1 percent to 1,688 points.

Emaar rose 1.4 percent and Aramex added 1.5 percent, but DP World slipped 0.2 percent.

Adel Nasr, United Securities brokerage manager, said Oman investors were chasing high dividend yield stocks such Nawras, up 1 percent, and Oman International Bank, up 3 percent.

The Qatari measure declined 0.2 percent to 8,130 points.

The Omani index rose 0.7 percent to 6,639 points.
 
— With input from agencies