Qatar's bourse fell sharply on Thursday, driven by news of criminal investigations against Fifa soccer officials as well as by profit-taking after an upgrade of some stocks by index compiler MSCI. Most other Gulf markets were also soft.

The Doha index slid 2.7 per cent, its biggest daily drop in five months, to 11,902 points, a five-week low, taking its losses to 4.1 per cent since the announcement on Wednesday of high-profile arrests and corruption probes at world soccer's governing body.

It is unclear if Qatar's right to host the 2022 World Cup could eventually be revoked because of the investigations; Doha has denied any wrongdoing in its successful bid for the Cup.

Even if the right were revoked, there would be little damage to Qatar's wealthy economy. The country could end up wasting billions of dollars on building stadiums and lose tourism revenue, but it could easily afford that.

However, the Fifa debacle is a potential blow to Qatar's image, and local retail investors reacted badly to the news. The broad sell-off affected sectors from property and telecommunications to banking and heavy industry.

"Clearly news about the Fifa officials is impacting sentiment and has pushed the market lower, but on generally weak volumes," said Akber Khan, director of asset management at Al Rayan Investment in Doha.

Ezdan Holding accounted for 43 per cent of the market's trading value, tumbling its daily 10 per cent limit. The stock had previously surged on the decision to include it in MSCI's emerging index at the end of this month; the jump in trading volume indicated passive funds tracking the index were already moving into the stock, prompting local investors to book profits. Despite the plunge, Ezdan is still sitting on gains of 8.9 per cent since its inclusion was announced on May 12.

Another newly included stock, Qatar Insurance, was one of a few gainers and surged 5.3 per cent on Thursday, indicating that local investors had not been buying it as aggressively as Ezdan.

UAE, SAUDI

MSCI picks also moved markets in the United Arab Emirates. Dubai's index edged up 0.2 per cent thanks to Emaar Malls, which surged 6.4 per cent ahead of its inclusion in the emerging markets index.

But Abu Dhabi Commercial Bank, whose weighting in the MSCI benchmark is set to increase, tumbled four per cent and dragged that emirate's index 1.3 per cent lower.

Saudi Arabia's main index was nearly flat as losses in the petrochemicals sector were offset by other stocks.

Petrochemicals giant Saudi Basic Industries, whose profits are sensitive to oil prices, edged down 0.6 per cent after Brent crude fell below $62 per barrel.

But Saudi British Bank jumped 2.8 per cent after saying it had completed a SR1.5 billion ($400 million) private placement of 10-year subordinated Tier 2 sukuk.

Miner Ma'aden rebounded after a bout of profit-taking and jumped 2.5 per cent to 47.80 riyals, nearing a record intra-day high of SR48.30  which it hit in the previous session.

Mouwasat Medical Services jumped 4.9 per cent after announcing the signing of a contract for construction of a new hospital building.

Egypt's index edged down 0.6 per cent as Telecom Egypt tumbled five per cent.

MSCI excluded Telecom Egypt from its emerging markets index this month and passive funds tracking that benchmark now appear to have exited the stock.

The company has said its board will consider buying some of its shares from the market; the board meeting will take place next week. - TradeArabia News Service