Gulf stock markets extended their losses on Tuesday as Brent crude plunged for a second session in a row and the threat of a fresh euro zone crisis in Greece also prompted investors to sell risky assets globally.

Brent crude touched a fresh five-and-a-half-year low at $51.23 a barrel on oversupply concerns. MSCI's emerging market index fell one per cent to a three-week low.

Saudi Arabia's main index dropped as much as 4 per cent in a broad sell-off early in the session, but then pared its losses and closed only 0.6 per cent down.

The kingdom's market is heavily weighted towards petrochemicals, whose profit margins will suffer from cheaper crude. The sector was the main drag on the bourse as it fell 1.2 per cent.

But dozens of stocks closed in the black and Mecca real estate developer Jabal Omar was the main support, jumping 2.2 per cent after it secured a SR4 billion ($1.1 billion) loan to refinance part of an existing facility.

The broad market's recovery followed a speech by King Abdullah - read on his behalf by Crown Prince Salman on state television - in which the monarch said the world's top oil exporter would deal "with a firm will" with the challenge posed by lower oil prices, although he did not give policy details.

Also, a survey of companies showed on Tuesday that growth in Saudi Arabia's non-oil private sector had accelerated slightly in December, driven by an expansion in output, though it remained weaker than it was in most of 2014.

"The rise in December's whole economy PMIs suggests that, in spite of the plunge in oil prices at the end of last year, economic activity in the Gulf has held up reasonably well," Jason Tuvey, Middle East economist at London-based Capital Economics, said in a note.

The kingdom adopted a large 2015 state budget last month which provides for a marginal increase in spending rather than a cut as some retail investors had previously feared.

Dubai's bourse led losses in the Gulf, dropping 3.2 per cent. Emaar Properties, the emirate's largest listed developer, topped trading volume as it lost 5.8 per cent.

However, shares in Air Arabia bucked the trend and added 1.4 per cent after the firm said on Monday it had bought a 49 per cent stake in Jordan's Petra Airlines and would establish a hub in the country. The carrier may also benefit from the sustained drop in oil prices.

Dubai's non-oil business activity growth also edged up in December.

But the emirate's bourse, which unlike Saudi Arabia's is open to direct foreign investment, has been hit in recent days by a global pullout from emerging markets. Foreigners from outside the Gulf were again net sellers on Tuesday, bourse data showed.

Elsewhere in the Gulf, Abu Dhabi's index fell 2.7 per cent, Kuwait lost 1.5 per cent and Oman's bourse slipped 1.3 per cent.

Egypt's market dropped 2.4 per cent. As an oil importer, Egypt should benefit from cheaper crude, but its equities are also vulnerable to global emerging market flows and Cairo's government relies heavily on financial aid from the oil-exporting Gulf states, which could conceivably shrink if they become more cautious about spending.-Reuters