Egypt's Orascom Telecom plunged to a 19-month low on Sunday after Algeria said the operator must settle all liabilities before the state concludes a deal to nationalise OT's local mobile phone unit. OT fell 3.6 percent to its lowest close since March 17, 2009.
The firm has reluctantly agreed to negotiate terms for the nationalisation of its Djezzy unit and now wants the deal concluded as quickly as possible, but the new conditions imposed by Algeria are likely to delay the process.
Egypt's index fell 0.4 percent to a month low. Kuwait Finance House ended flat, having been down 3.3 percent intraday, after the Islamic lender posted a 23 percent decline in third-quarter profit.
Kuwait's bank index fell 0.5 percent, trimming its gains to 33 percent since July 4. Saudi Basic Industries Corp climbed 0.5 percent to a five-month high, but disappointing bank earnings continued to weigh on Saudi Arabia's index.
Petrochemical product prices are up about 9 percent in October, said Hesham Tuffaha, Bakheet Investment Group head of research, boosting sector shares. These have upside potential in the near term, he said, especially with product prices seen rising further if a new quantitative easing programme by the US Federal Reserve meets expectations. This is seen pushing up equity and commodity prices as investors hedge their exposure to a weakening US currency.
The Saudi banking index eases 0.03 percent, taking its October losses to 4.1 percent. Emaar Properties was the main drag, falling 1.5 percent, as Dubai's index eased from Thursday's six-month high and Shakeel Sarwar, head of asset management at Securities & Investment Co (SICO) in Bahrain, warned further gains were likely to be limited.
"This is because of the macro situation - real estate stocks are in distress, with huge over-supply in the market, while banks - especially those from Dubai - don't have any business to do," said Sarwar. "So the economic fundamentals remain below average and therefore the gains such as we saw in September are not sustainable, despite attractive valuations."
Dubai house prices will sink another 11 percent before bottoming out in 2012, as oversupply delays any hopes of a recovery, a Reuters poll found last week.