Gulf stock markets steadied and some rebounded on Monday after tumbling a day earlier in response to a plunge in oil prices.

Brent crude fell nearly $2 a barrel to a five-year low below $68 in early trade on Monday but then pared some losses and climbed towards $70. That appeared to soothe Gulf investors' nerves and inspire some late buying.

Saudi Arabia's index rose 1.1 per cent as most market sectors rebounded, while petrochemicals were almost flat. The bourse closes at 1230 GMT, hours after its Gulf counterparts, and so reacts more to Western market moves.

Alinma Bank was the main support, surging 5.3 per cent.

Loss-making telecom operator Zain Saudi fell 8.1 per cent after tumbling by its daily 10 per cent limit on Monday, touching an all-time intraday low of SR7.25 as its trading volume surged.

On Thursday, the company proposed cutting its capital to eliminate accumulated losses up to September 30.

Zain Saudi also cut its capital in 2012 to SR4.8 billion ($1.28 billion) from SR14 billion. It then launched a rights issue to up its capital to SR10.8 billion.

Fears of another rights issue, which would force investors to commit more cash or have their holdings diluted, may have sparked this week's sell-off.

Qatar's benchmark rose 0.8 percent as banking and property stocks led gains. Qatar National Bank added 1.2 per cent, while developers Barwa Real Estate and Ezdan Holding rose 3.5 and 0.9 per cent respectively.

But stocks exposed to the oil and gas sector remained under pressure. Qatar Gas Transport Co fell 1.7 per cent and drilling rig provider Gulf International Services lost one per cent.

In Dubai, some stocks also rebounded, but this was not enough to stop the index dropping 2.2 per cent because its biggest listed company, Emaar Properties, fell its daily 10 per cent limit.

Sunday was the record date to qualify for Emaar's special dividend of Dh1.257 per share, which is linked to the initial public offering of subsidiary Emaar Malls Group in October.

Shares in Emaar Malls rose 2.7 per cent, contractor Arabtec Holding gained 1.6 per cent and developer Deyaar added 2.2 per cent.

Abu Dhabi's index slipped 0.2 per cent but blue chips National Bank of Abu Dhabi and Aldar Properties jumped 4.6 and 3.1 per cent respectively.

Egypt's benchmark edged down 0.8 per cent as Commercial International Bank and EFG Hermes fell 1.0 and 2.3 per cent respectively.

Although Egypt's bourse has avoided the sharp drops experienced by markets in oil exporting countries, negative regional sentiment may have slightly soured the mood in Cairo too, said Allen Sandeep, Naeem Holding director of research.

Egypt's trading volume was lower than on days when the market gained last week, "which suggests we are still in a bullish trend", Sandeep added.-Reuters