Heavyweight telecom operator Zain fell 1.1 percent, Commercial Bank of Kuwait shed 2.5 percent and Ahli United Bank dipped 1.2 percent.
The index slipped 0.5 percent to 5,754 points, its largest one-day loss in six weeks, to end at its lowest close since August 2004.
"Surprisingly, there was a strong exit from foreigners today on what little liquidity we have from them — they don't like the instability," said a Kuwait-based trader who asked not to be identified.
Kuwait's ruler has called an early parliamentary election for Feb. 2, nearly two weeks after he dissolved the chamber after a long-running dispute with the cabinet that has paralyzed politics in the oil-exporting country.
"We're less than a month away from elections and the market will continue moving sideways - 20 points up or down," the trader said.
In the UAE, markets ended mixed with Dubai's benchmark slipping 0.3 percent to 1,347 points and Abu Dhabi's index climbing 0.3 percent to 2,417 points.
Emaar Properties shed 0.8 percent and logistics operator Aramex dipped 1.6 percent.
Abu Dhabi Commercial Bank was the main support to the index, rising 2.5 percent.
"Abu Dhabi's bank performance in 2011 was better than people expected and it's a good buying opportunity at these levels," said Samer Al-Jaouni, general manager of Middle East Financial Brokerage Co.
"We might see some buying appetite for the banking sector but if we are talking about price movement, we have to see institutional funds coming into the market, which have been absent."
In Qatar, the benchmark ticked up 0.1 percent to 8,892 points — a fresh 11-month closing high on local buying interest.
Barwa Real Estate rose 1 percent, Qatar Gas Transport climbed 0.7 percent and Qatar National Bank gained 0.1 percent.
Saudi Arabia's Tadawul All-Share Index (TASI) eased 0.09 percent to 6,408 points, down for a second session in five.
Petrochemical stocks were the main drag. Saudi Basic Industries Corp. (SABIC) and National Industrialization slipped 0.5 percent each.
Sentiment was downbeat after Advanced Petrochemical Company (APC) said it expected a fourth-quarter net profit of SR91 million ($27 million), a 2 percent increase over the same period of 2010.
Bakheet Investment Group had estimated APC to post a quarterly profit of SR121.1 million.
Hesham Abo-Jamee, chief executive officer at Bakheet Investment Group, said he expected petrochemical companies to post an annual growth of about 20 percent, but little growth for the fourth-quarter, compared to the earlier quarter.
In Oman, the bourse snapped a five-session rally, easing 0.1 percent to 5,714 points.
