Stock exchanges in United Arab Emirates closed lower on Friday, as tensions in the region escalated and following hawkish commentary from Federal Reserve officials. Iran reiterated its pledge to punish Israel on Friday at a funeral for seven officers killed in a suspected Israeli airstrike on the Iranian embassy compound in Syria this week. Undermining expectations that had boosted markets of early interest rate cuts, some Fed officials have grown more hawkish.

Minneapolis Fed President Neel Kashkari said rate cuts might not be required this year if inflation continues to stall Most Gulf currencies are pegged to the dollar, and any U.S. monetary policy change is usually mimicked by Saudi Arabia, the United Arab Emirates and Qatar.

Dubai's main index retreated 0.1%, dragged down by a 1.9% decline in toll operator Salik Company and a 1.7% fall in state-run Dubai Electricity and Water Authority . Among the losers, сonsumers' co-operative Union Coop dropped by 7.1%, its steepest decline since mid-August after the company reported a nearly 20% slump in its full-year net profit to 296.9 million dirhams ($80.86 million).

In Abu Dhabi, the benchmark index edged down 0.02%, pressured by a 1.9% decrease in Adnoc gas and 2.2% decline in Adnoc Distribution. The losses in the index were capped by 5.4% jump in IHC-owned investment firm Multiply Group. Oil prices - a major contributor to Gulf's economies - were up 0.35% to $90.97 a barrel by 1120 GMT.

  • ABU DHABI down 0.02% to 9,237
  • DUBAI lost 0.06% to 4,244

($1 = 3.6718 UAE dirham)

(Reporting by Mohd Edrees in Bengaluru; editing by Barbara Lewis)