Emirates NBD fell 3 percent, Drake & Scull shed 3.7 percent and Aramex declined 1.6 percent.

The benchmark slipped 0.5 percent to, its lowest close since March 8 as volumes hit a five-week peak.

“We’re drifting sideways — that will be the case for the next two weeks and we’ll look for direction as we get close to the G20 meeting in November,” says Matthew Wakeman, EFG-Hermes managing director for cash and equity-linked trading.

“Q3 (earnings) will take a back seat to Europe (debt issues).”

Other Gulf markets also fell Thursday.

Kuwait’s telecom operator Zain dragged down the bourse to a four-week low after bidders in Zain Saudi pulled out and other Gulf markets also fell.

Kingdom Holding Co. and Bahrain Telecommunications (Batelco) scrapped their joint $950 million bid to buy a quarter of Zain Saudi.

A senior source at seller Zain Kuwait said the deal failed due to disagreements with the indebted Saudi telco’s lending banks.

In Kuwait, Zain ended 3.1 percent lower, while National Investment Company, owned by Zain’s largest shareholder Khafari Group, dipped 1 percent.

“It’s a difficult environment to do any kind of acquisitions,” said Hashem Montasser, managing partner at Frontlane Capital, a Dubai-based asset management firm.

“For the next few months M&A in the region will remain subdued given the global uncertainty and on the local level — uncertainty from political side. You have companies that have exposure to the region, which makes it difficult for M&A. I’m not surprised about Zain.”

The bourse benchmark closed 0.3 percent lower at its lowest close since Aug. 29.

Bahrain’s Batelco rose 0.5 percent, against the index, which fell 1.5 percent.

In Qatar, the index dipped 0.3 percent, extending its 2011 decline to 3.3 percent with little incentive for foreign funds to enter at new positions.

Qatar National Bank was the main drag, falling 0.5 percent. Industries Qatar shed 0.6 percent and Qatar International Islamic Bank declined 1.3 percent.

“Foreigners will remain on the sidelines, locals are invested but it’s a small club to start with anyway,” said Frontlane’s Montasser.

“The value has not come down enough compared to other emerging markets.”

Foreign ownership limits in Gulf equities and other regulatory restrictions are a major deterrent for foreign funds, he added. 

Index provider MSCI delayed to December its decision on whether Qatar and the United Arab Emirates should be classified as emerging markets, with issues such as stringent foreign ownership limits and use of dual account structures delaying the move.

Qatar caps the limit at 25 percent.

Oman’s index slipped 0.2 percent to a five-week low with Bank Dhofar weighing.

The bank fell 2.7 percent. Nawras declined 2.2 percent.