The Dubai Financial Market fell to its lowest point in more than two weeks as Europe failed to commit US$12 billion in critical aid payments for Greece.
Euro-zone finance ministers delayed a sign-off on the widely anticipated payment, sending equities across the world sliding.
The oil price also dropped to a four-month low, as Brent crude dropped as much as 1.6 per cent to $111.42 a barrel.
Analysts said local markets tracked these declines, with the Dubai Financial Market General Index dipping 1.7 per cent to 1,572.46 points and the Abu Dhabi Securities Exchange General Index slipping 0.7 per cent to 2,757.12 points.
There were few gains in the capital, with losses led by Abu Dhabi Commercial Bank, which retreated 2.7 per cent to Dh3.2. National Bank of Abu Dhabi edged 1.3 per cent lower to Dh11.75, and Aldar Properties fell 2.1 per cent to Dh1.37.
But the debut of Insurance House, the Abu Dhabi company offering property and accident insurance, was well received after shares almost doubled.
The stock rose 94 per cent at the open, and closed up 38 per cent to Dh1.42. It opened at Dh1.15 a share. Qatarís market also fell 1.4 per cent to 8,217.32 points, the lowest in almost two weeks as Qatar National Bank and Doha Bank dragged the measure down.
Shares in those companies lost 2 per cent to 137 Qatari rials and 2.7 per cent to 50.5 rials respectively.
The index compiler MSCI will make a decision at 1am local time, on whether the UAE and Qatar will be upgraded to emerging market status.