Most Middle East markets fell in muted trade, with little news to draw fresh money in.

The Tadawul All-Share index (TASI) dropped 0.37 percent to 6,499 points. The sector activity for the day was mostly negative with 12 out of 15 closing with losses ranging from 0.04 percent by the Hotel & Tourism sector to 1.58 percent by the Media and Publishing sector. On the other hand the gaining sectors were the Building & Construction with 0.11 percent, the Telecommunication & Information Technology sector with 0.46 percent, and the Insurance sector with 0.47 percent. The overall market breadth for the day was negative with 41 advancers against 83 decliners giving it an AD ratio of 0.49, the Financial Transaction House (FTH) said in its daily market commentary.

The stock market turnover reached SR2.91 billion on Wednesday.

Orascom Telecom fell 1.6 percent. It said it had already paid Algeria taxes for 2008 and 2009 and would take legal steps to challenge the "completely unfounded" reassessment. The latest demand is on top of previous Algerian back-tax claims of $600 million relating to Djezzy.

The Egypt index fell 0.8 percent to 6,943 points.

Dubai's Emaar Properties fell 2 percent to a 14-week low after saying it may raise its stake in troubled Islamic mortgage provider Amlak.

Emaar, which owns a 48 percent stake in Amlak, may also take provisions from Amlak in the first quarter of 2011. The latter's shares have been suspended since November 2008, pending a mooted merger with rival mortgage provider Tamweel, a deal that appears increasingly unlikely.

Emaar holds about 800 million dirhams ($218 million) of Amlak's estimated 11.4 billion dirhams of debt, said Majed Azzam, AlembicHC real estate analyst.

Amlak's business model of funding long-term mortgages with shorter-term borrowing collapsed as the credit crunch dried up liquidity and Dubai property values tumbled, with house prices now some 60 percent below 2008 peaks.

"We believe that Amlak's assets could see significant write-downs potentially resulting in negative equity, so the company would need a fresh equity injection in order to survive," said Azzam.

"Emaar has two options - convert debt into equity and take control of Amlak or write down its Amlak investment and try to recover the debt. Either way, minority shareholders are unlikely to recover their equity."

Dubai's index fell 0.8 percent to 1,630 points, its sixth straight loss, falling to its lowest close since Sept. 15.

Kuwait's Zain rose 4.1 percent to a 15-month high after a court delayed hearing a lawsuit from a shareholder unhappy with Etisalat's $12 billion bid for a 46-percent stake in the Kuwaiti firm as traders bet the deal would go through. The Kuwaiti index rose 0.6 percent to 6,827 points.

The Qatari index dropped 0.5 percent to 8,773 points.

The Omani index slipped 0.08 percent to 6,646 points.
 
— With input from agencies