These are part of a restructuring plan for the state-linked firm, which has made losses for four straight quarters and faces an estimated $3 billion funding gap in 2011. Abu Dhabi’s government will pay Aldar $4.5 billion for various assets.

“Equity holders suffer immediate equity impairment and future dilution, but solvency is now assured,” Nomura wrote in a research note. “The stock now looks expensive relative to its peers and that will likely take some time to correct.”

Aldar fell 7.1 percent to its lowest close since Aug. 12.

The firm’s sukuk holders, plus local bank and trade creditors were the winners from Aldar’s restructuring, said Akram Annous, MENA strategist at Al Mal Capital.

“There is a good reason most banks and real estate companies trade at huge discounts to book,” said Annous. “Their financials don’t reflect reality. Nobody believes them. After this restructuring, you won’t be able to say that about Aldar. I expect the equity market to slowly warm to this news.”

Abu’s Dhabi’s index fell 0.9 percent, while Dubai slumped to a four-month low as property stocks headed losers.

“Aldar is a drag on sentiment — it’s not always rational, but this is how the market operates,” said Tarik Lotfy, Arqaam Capital Head of MENA equities.

Kuwait’s Zain ended flat, with investors little moved by a delay in a $12 billion stake sale to Abu Dhabi’s Etisalat. The latter fell 0.9 percent.

“Etisalat has made a generous offer and has the ability to finance the transaction, so for minority shareholders it’s worth waiting for,” said Irfan Ellam, Vice President, and Al Mal Capital telecoms analyst.

Egypt’s main index dropped 1 percent as the ousting of Tunisia’s president spurred fears of instability in other Arab countries. Citadel Capital fell 2.1 percent and SODIC dropped 1.6 percent.

“It has really affected the political risk in the region,” said Youssef Kamal of Naeem Brokerage.

The Tadawul All-Share Index (TASI) ended at to 6,782.33 points, after gaining 0.05.

The sector activity for the day was mixed with 8 out 15 closing with gains ranging from 0.04 percent by the Agriculture & Food Industries sector to 1.25 percent by the Industrial Investment sector. On the other hand the losing sectors ranged from -0.12 percent by the Multi-Investment sector to -0.46 percent by the Insurance sector. The overall market breadth for the day was positive with 43 advancers against 81 decliners giving it an AD ratio of 0.53. The liquidity for the day reached SR3.36 billion, the Financial Transaction House said in its daily market report.

Qatar’s index edged up to a new 27-month high, with foreigners now net buyers on the bourse for 14 weeks running, said Hani Girgis, assistant chief dealer at Dlala brokerage.

These investors are likely to hold onto positions at least until companies make dividend payouts for 2010, he added.

Abu Dhabi’s benchmark fell 0.9 percent to 2,713 points while Dubai’s index dropped 1.5 percent to 1,601 points. Kuwait stocks fell 0.2 percent to 6,923 points and Qatar’s bourse edged up 0.07 percent to 9,243 points. Oman and Bahrain stocks also edged up 0.01 percent and 0.3 percent respectively.