Other Middle East benchmarks also dropped, tracking losses on global markets, which fell to eight-week lows as fears Greece's debt crisis would spread to other weak euro-zone members spurred investors to dump stocks.
"(Regional) markets have run quite a bit and there's a lack of news flow at the moment - Q1 numbers have come out and markets are ripe for correction," said Shahid Hameed, Global Investment House head of asset management for the Gulf region.
The Tadawul All-Share Index (TASI) fell 0.99 percent to 6,817.86 points. The losses were wide spread and seen across the board with all sectors closing with losses ranging from 0.17 percent by the Energy & Utilities sector to 1.38 percent by the Petrochemical Industries sector. The overall market breadth was strongly negative with 14 advancers against 114 decliners giving it an AD ratio of 0.12, the Financial Transaction House (FTH) said in its daily market commentary.
Saudi Basic Industries Corp. (SABIC) lost 1.6 percent, while Samba Financial Group and SABB dropped 1.2 and 1.9 percent respectively.
"The sell-off in the Saudi market echoed a wave of fear that gripped world equity markets," said a Riyadh-based fund manager who asked not to be identified. "The decline in money supply in Saudi Arabia and credit tightening measures in China also added to negative sentiments."
Annual growth in Saudi Arabia's M3 money supply slowed for a sixth straight month in March.
Kuwait's index fell 1 percent to its lowest close since Feb. 11, while Qatar dropped 1.3 percent to a six-week low.
The Kuwaiti measure fell to 7,179 points, while the Qatari index dropped to 7,416 points.
Industries Qatar, which like rival petrochemicals producer SABIC is seen as dependent on a global recovery, fell 1.8 percent.
"Across the region we are seeing this sell-off - people are taking a wait and see approach because of the Greece issue and fears of a contagion across Europe," said Hameed.
"People are choosing to stay on the sidelines and that's what's causing the weakness in the market."
Egypt's Orascom Telecom (OT) fell 7.3 percent lower as investors, believing a sale of assets is unlikely to proceed quickly, booked profits and exited leveraged positions, traders said.
OT rose sharply earlier this month on talk it would sell its Algerian unit, but has pared much of those gains since the Algerian government expressed its opposition to the sale.
"Declines on our markets are less severe than those on global markets, so Gulf stocks could increasingly emerge as a defensive play versus the rest of the world," said Haissam Arabi, chief executive at Gulfmena Alternative Investments.
Dubai's index fell 0.4 percent to 1,736 points, rallying late to claw back most of its losses after being down 2 percent intraday.
"The UAE markets have been missing bottom-up fundamental buyers for a long time and that has left the market to the vagaries of retail traders and aggressive hedge funds that get out every time positions move up or down 3 percent, making markets very volatile," said Zahed Chowdhury of Al-Mal Capital.
- With input from agencies
