Most stock markets in the Gulf retreated on a wave of profit-taking on Tuesday, led by Qatar, where there was a pull-back in some of the top stocks that had shot up before joining MSCI's emerging market index last week.

The Doha benchmark fell 2.4 percent as all but one of its components slid. Islamic lender Masraf Al Rayan was the main drag on the index, sliding 3.4 percent.

It had been the top performer among the 19 stocks in Qatar and the United Arab Emirates that index compiler MSCI added to its emerging index. The stock had soared 28 percent between May 15, when the final list of index components was published, and June 1, the first day after the upgrade.

Qatar Islamic Bank, also among the top gainers in that period, fell 7.6 percent.

The profit-taking bout coincided with and was partly a response to fresh allegations, which Qatar has strongly denied, that corruption was involved in its success in winning the right to host the 2022 soccer World Cup.

Some of the market's gains over the last few years have been based on the expected economic boost from infrastructure and tourism spending related to the tournament.

Many fund managers think an unprecedented Fifa decision to deprive Qatar of World Cup rights remains very unlikely, but some retail investors appeared less sanguine.

However, analysts believe Qatar's economy is so strong and its natural gas resources so large that even if it lost the right to host the tournament, the impact on its economy and financial markets would be small.

UAE, SAUDI

Markets in the United Arab Emirates also pulled back as the positive buzz surrounding the MSCI upgrade faded. Dubai's index fell 1.5 percent, erasing small gains made early in the session.

National Central Cooling Co jumped 6.4 percent after winning a $1.6 billion UAE armed forces contract. Emaar Properties, also among the new MSCI index components, was the main drag, falling 3.4 percent.

"The long-term view on the Dubai index remains on the upside, but for the short term we expect a corrective pull-back to occur again," NBAD Securities analyst Shiv Prakash said in a note.

Abu Dhabi's benchmark fell 1.4 percent, dragged down by First Gulf Bank and Abu Dhabi Commercial Bank , which were down 2.9 and 1.7 percent respectively.

Dana Gas shot up as much as 13 percent during the session on speculation that the firm had won an arbitration case aimed at recovering money owed to it abroad.

Some market participants said the speculation was linked to the company's claims against the government of Iraq's Kurdistan region, while others said the rumour concerned arbitration involving Iran. Dana Gas made no official statements and its officials could not be reached for comment. The stock closed up 4.8 percent.

Saudi Arabia's index edged down 0.3 percent. Mobily , the kingdom's second biggest mobile operator, was the main drag for a second day after cutting its second-quarter profit outlook by $90 million on Monday, after its fixed-line rival scrapped a network-sharing deal. The stock sank 2.5 percent on Tuesday after losing 4.3 percent on Monday.

TUESDAY'S HIGHLIGHTS
DUBAI: The index fell 1.5 percent to 5,073 points.
ABU DHABI: The index slid 1.4 percent to 5,064 points.
QATAR: The index pulled back 2.4 percent to 13,221 points.
SAUDI ARABIA: The index edged down 0.3 percent to 9,839 points.
EGYPT: The index slipped 0.7 percent to 7,963 points.
KUWAIT: The index edged down 0.03 percent to 7,368 points.
BAHRAIN: The index was flat at 1,458 points.
OMAN: The index added 0.6 percent to 6,952 points.  - Reuters