Dubai dropped 3.8 percent to 1,411 points — its lowest finish since June 2004. Volumes hit a four-week high and were triple those of Sunday, indicating rising selling pressure, Reuters said.

“Aside from political factors, interest rates are rising and the cost of borrowing in the region is going up which is not good for banks and the overall economy,” said Eric Swats, head of asset management at Rasmala Investments.

Contractor Drake & Scull fell 9.6 percent and Emaar Properties dropped 6.3 percent.

The Abu Dhabi index fell 1.5 percent to 2,589 points.

“Events in Bahrain, Yemen and Oman broke the camel’s back — investors saw the market wasn’t going to rally, so thought it better to sell now and potentially buy back at lower levels in a couple of weeks time,” said a Dubai-based analyst.

Oman’s index fell 4.9 percent to 6,142 points — a seven-month low in its biggest decline since Jan. 28, 2009. Bank Muscat dropped 8.8 percent and Bank Sohar slid 8.6 percent.

Omani protesters demanding political reforms blocked roads to a main export port and refinery in Sohar on Monday, Reuters said.

“People are now beginning to realize potential revolutions are now on the doorstep of the GCC (Gulf Cooperation Council), whereas previously they were one step removed,” said the Dubai analyst.

“The consensus view two weeks ago was that the GCC was entirely immune, but events in Oman and Bahrain have shown that it is susceptible and people are trying to work out how much further unrest will penetrate the GCC.”

The Saudi index slipped 0.15 percent to a new nine-month low at 5,941.63, recovering from a 1.9 percent intraday low, which may bode well for other regional markets. It fell 5 percent on Sunday, helping to spark Monday’s sell-off.

The sector activity for the day was all negative except two gaining sectors.

The losing sectors ranged from 0.01 percent by the Telecommunication & Information Technology sector to 1.11 percent by the Media and Publishing sector.

On the other hand, the gaining sectors were the Petrochemical Industries and the Energy & Utilities with 0.17 percent and 0.47 percent increase respectively.

The overall market breadth for the day was negative with 58 advancers against 71 decliners giving it an AD ratio of 0.81, the Financial Transaction House (FTH) — licensed by the Capital Market Authority (CMA) — said in its daily market report.

The stock market turnover for the day reached SR4.73 billion.

Some petrochemicals stocks rose, with a spike in oil prices likely to boost first-quarter earnings, but few traders looked that far ahead, said Youssef Kassantini, a Saudi-based analyst. National Industrialization (TASNEE) added 1 percent.

“Saudi is very different to the rest of the region - its economy is much more solid than that of Egypt or Libya,” added Kassantini.

“But fear is controlling traders, rather than fundamentals or rational analysis.”

Qatar’s index fell 3.2 percent to 7,933 points — its lowest finish since Nov. 4. Barwa Real Estate dropped 5.8 percent.

Egypt’s market will re-open on Tuesday. It has been closed since Jan. 27 after popular protests that ultimately ended former President Hosni Mubarak’s 30-year rule. Traders forecast many stocks will open at their maximum downward limit, Reuters said.

“If Egypt had re-opened immediately after Mubarak’s fall, there would have been a celebration rally, with people willing to buy from a trading perspective, before having to figure out how Egypt’s political situation will be resolved,” said Akram Annous, MENA strategist at Al-Mal Capital.

“It would have been an easy buy, but we’re now more than two weeks later, the euphoria has passed and we don’t know what will happen to companies that benefited from their closeness to the former regime. Will there be reconciliation or a witch hunt?”

The Bahrain index dropped 0.4 percent to 1,431 points.