The region's markets flashed red yesterday as investors caught their breath after weeks of fast-paced rallying in equities to watch Europe ahead of a crucial Greek debt-swap decision today.
In Abu Dhabi, the market fell 2.1 per cent to close at 2,553.32. The Saudi Tadawul All-Share Index slipped 0.3 per cent to 7,374.92. In Kuwait, stocks were down 0.9 per cent to 413.06. The Oman exchange fell 0.7 per cent to 8,605.17. In Jordan the index closed up 0.3 per cent at 1,986.27.
Most affected was the Dubai index, which took its biggest one-day hit in two years. The Dubai Financial Market (DFM) General Index sank 81.41 points to close down 4.8 per cent at 1,6077.77.
But analysts said the drop represented a healthy releasing of steam and not a sign of a market gone off the boil.
Sherif Zeneiny, the head of equities at National Bank of Abu Dhabi, said investors were taking profits made from the DFM's recent rally - the index is up 18.8 per cent this year - and yesterday's fall was in line with drops last night in the Asian, US and European exchanges.
"The European markets were under pressure yesterday [Tuesday], which is the catalyst for the UAE sell-off. Investors are taking money off the table because risk is off generally," said Mr Zeneiny. "We might see more selling pressures in the coming sessions, but this is healthy. This is not panic mode."
Arabtec continued to weigh on the market after a huge sell-off of the stock on Tuesday. Yesterday, Arabtec closed down 9.8 per cent.
The builder joined a club of companies that shed more than 9 per cent during the day, including Union Properties, down 9.8 per cent, and Tabreed, which fell 9.6 per cent.