Abu Dhabi stocks outperformed Gulf markets on Wednesday buoyed by financial stocks, while Saudi snapped two days of gains pressured by banking shares.
Last week's attacks on tankers in the Gulf of Oman raised fears of confrontation in a vital route for global oil supply and heightened tensions between Iran and the United States.
Investor concerns have eased somewhat, after both Tehran and Riyadh said they did not want a war, but tensions in the region remain high.
The Abu Dhabi index added 1.3%, as First Abu Dhabi Bank (FAB) and Emirates Telecommunications Group were up 1% and 1.1% respectively.
On Wednesday, First Abu Dhabi Bank, the biggest lender in the United Arab Emirates (UAE), said that it will close its sole branch in Qatar, citing Doha's regulatory actions against the bank.
Earlier in June, Qatar placed further restrictions on FAB as it continues a probe into alleged currency manipulation begun after the UAE and other Arab states launched a boycott against Qatar in mid-2017.
However, First Abu Dhabi Bank said Qatari actions have no impact on its business outside Qatar, as the Doha branch contributed less than 0.03% of FAB's full-year 2018 net profit.
Qatar's index closed 0.8% higher with lender Masraf Al Rayan surging 2.5% and Qatar International Islamic Bank jumping 4.6%.
In Dubai, the index was up 0.4%, led by a 1.2% rise in Dubai Islamic Bank and a 3.6% surge in Emaar Malls .
The Saudi index declined 0.7% with most of its banking shares sliding. Riyad Bank 1010.SE dropped 3.5% and National Commercial Bank , the country's largest lender, lost 1.2%.
Saudi Arabia's consumer prices fell in May from a year earlier for the fifth month in a row, but the consumer price index (CPI) rose marginally from April, signalling the kingdom is having some success in boosting its non-oil sector.
The annual CPI decline has partly reflected the fading impact of last year's introduction of a value-added tax (VAT), economists have said.
But Maharah Human Resources 1831.SE jumped 10% to 83.4 riyals ($22.24). The stock was offered at 69 riyals per share.
Egypt's blue-chip index traded in the red for the second day. The index was down 0.5 percent with Commercial International bank sliding 0.5 percent.
Exchange data on Wednesday showed Egyptian and Arab investors were net sellers of Egyptian stocks.
(Reporting by Ateeq Shariff in Bengaluru; Editing by Andrew Cawthorne) ((AteeqUr.Shariff@thomsonreuters.com; +918067497129;))