Dubai's bourse made its largest one-day drop in 15 months and Abu Dhabi's measure also fell as investors cut their market exposure ahead of a decision by index compiler MSCI on whether to upgrade the UAE to emerging market status.

Dubai's index fell 2.3 percent to 2,344 points, its heaviest one-day loss since March 2012. Monday's decline trims its 2013 gains to 44.3 percent.

"We've see a spectacular rally and the drop has to be put in perspective - it's profit-taking," said Amer Khan, fund manager, Shuaa Asset Management. "To some extent, it's investors knowing full well that there is an event around the corner, which will dictate market direction."

MSCI will announce its decision on whether to upgrade the UAE and Qatar from frontier market status on June 12.

Analysts say UAE bourses have fulfilled MSCI's requirements and investors are largely upbeat about the country's prospects of being reclassified as an emerging market.

"UAE has its best chance yet, but ultimately it will depend on whether the large emerging market funds want it to happen," Khan added

Abu Dhabi's benchmark fell 1 percent to 3,556 points, down for a third session in four since June 3's 54-month peak.

In Doha, the index rose 0.4 percent to 9,373 points, extending gains to reach its highest close since September 2008.

The market has rallied 12.1 percent year-to-date, in a move seen as more of a catch-up to neighbouring bourses.

MSCI is unlikely to upgrade Qatar, analysts say, with the biggest hurdle its low foreign ownership limits for listed companies. – Reuters