Zain fell 1.5 percent. In March, it signed a deal to sell its African assets to India's Bharti Airtel, but Congo Republic has since said the sale is unlawful.
On Thursday, Goldman Sachs downgraded Zain to sell, saying the market had reacted "too positively" to the sale.
"There are some legal issues in terms of transferring some of the African licenses to Bharti, which could delay completion of the deal," said a Kuwait analyst who asked not to be named.
A delay would also put back an expected special dividend from Zain, spurring impatient investors to sell the stock now.
"A deal of this size can take months to complete and there will be uncertainty during this period. This is normal, but retail investors in particular don't like uncertainty," the analyst added.
A late rally enabled Kuwait's index to limit its losses to 0.01 percent, slipping to its lowest finish since Feb. 11. The index fell to 7,244 points.
Saudi Basic Industries Corp. (SABIC) rose 1 percent to end a three-day losing streak as oil prices hit a five-day high, helping Saudi Arabia's Tadawul All-Share Index (TASI) add 0.2 percent to 6,730.12. The sector activity for the day remained positive with 9 out of 15 sectors closing with gains ranging from 0.40 percent by the Energy & Utilities sector to 2.78 percent by the Transport Sector. The remaining 6 sectors closed with losses ranging from 0.03 percent by the Banks & Financial Services sector to 2.02 percent by the Multi Investment sector. The overall market breadth also remained positive with 62 advancers against 59 decliners giving it an AD ratio of 1.05, the Financial Transaction House (FTH) said in its daily market commentary.
Saudi Telecom Co. rose 1 percent, clawing back some of Tuesday's results-inspired decline, but Etihad Etisalat (Mobily) slipped 1 percent as the operator's first-quarter profit missed forecasts.
"The Saudi index seems to be moving beyond quarterly results to reiterate faith in long-term growth story of Saudi Arabia, as indicated by expected surplus budget for this year," said Mohammed Ishaq Ali, a fund manager at Al-Rajhi Capital.
"The recent retreat also marks a rebalancing of portfolios and participation of investors who were waiting for a correction to start taking fresh bets to make up for missing the rally."
Dubai's index fell 0.8 percent to a month low of 1,731 points, while Abu Dhabi's measure rose despite volumes falling to a 22-month low. The Abu Dhabi index climbed 0.5 percent to 2,820 points.
"Dubai needs to end this week above 1,750 points, if it doesn't this will indicate a continuation of selling pressure, with the next support coming at 1,600 points," said Marwan Shurrab, vice-president and chief trader at Gulfmena Alternative Investments.
Builder Arabtec fell 2 percent, while Emaar Properties and Deyaar lost 0.8 percent and 5 percent respectively.
"Investors are waiting for first-quarter results and expect real estate numbers to be bleak," said Vyas Jayabhanu, head of investments, Al-Dhafra Financial Broker.
National Bank of Abu Dhabi rose 3 percent after saying it may buy back some of its bonds.
- With input from agencies
