Stock markets fell across the oil-exporting Gulf on Thursday as institutional and retail investors hurried to close positions before the New Year, dragging most benchmarks to fresh multi-year lows.

Oman's index was the biggest decliner in the Gulf, dropping almost 4 percent to a near 2-1/2-year low, while markets in Dubai and Abu Dhabi retreated to new four-year troughs.

Investors were clearing their books before the end of a turbulent year on regional bourses, a number of which had rallied to record highs in the middle of the year before tumbling as much as 75 percent amid a global stock market rout.

"Most of the selling today is from retail investors and GCC institutions. They are closing positions before the end of the year," said Adel Nasr, local brokerage manager at United Securities in Muscat. "They need to their clear accounts."

Kuwaiti shares declined more than 2 percent, falling for a second day as investment firms and retail traders seeking cash to meet obligations took advantage of a new state fund set up to stabilise the market.

"The purpose of this portfolio that started yesterday is to provide stability for the market, not to drive it up," said Talal al-Tawari, head of GCC equity division at Gulf Investment Corporation.

"A lot of people are looking for buyers and the (state fund) portfolio provides bids when there are no bids." Both Dubai and Abu Dhabi markets fell to their lowest closes since August 2004, despite late-session buying that lifted Arabtec Holding shares by almost the 15-percent daily limit.

Tight credit conditions in the UAE and a downturn in property prices in Dubai has dampened investor confidence about the prospect for company profits next year as they may be forced to slow down expansion plans.

Emaar Properties, whose shares have tumbled about 85 per cent this year, said on Wednesday a decision not to buy back 10 per cent of its shares before a Wednesday deadline was in the best interest of shareholders and the firm.

"It's about liquidity," said Amr Diab, head of sales at the brokerage of EFG-Hermes. "Emaar is involved in lots of projects and it is in need of cash for expansion. With tight liquidity at banks, this is a difficult environment to get loans."

The Oman index fell 3.87 percent to 4,998 points, its lowest close since August 23, 2006. Oman Telecommunications Co dropped 4.89 percent and National Bank of Oman lost 6.8 percent.

The index had rallied to a record high in June, but has since tumbled almost 59 percent amid a global stock market rout.

The Kuwait index closed lower for a second trading day, falling 1.97 percent to 8,240 points in thin-volume trading.

Mobile Telecommunications Co led declines among blue chips, falling 4.81 percent. "There are various parties that have a good reason to sell in the markets.

Investment companies want to meet their funding needs and obligations and are in desperate need of liquidity," Tawari said.

The Dubai index, ending lower for a sixth trading day, fell 1.4 percent to 1,587 points, its lowest finish since August, 2004.

Emaar Properties recovered from early-session selling, but still ended 1.78 percent lower. "There are no bids," says Ahmed Hamdy, senior relationship manager at Prime Emirates.

"There are certain sellers who want to get out of the market before the end of the year. Maybe he has to sell for margin calls or to close positions, hoping to make a fresh start next year."

The Abu Dhabi measure  fell 1.91 percent to 2,281 points, its lowest close since Aug. 2004. Emirates Telecommunications Corp shed 1.92 percent to 9.71 dirhams ($2.64), having hit 9.30 dirhams earlier in the session, its lowest level since October 2004.

In Bahrain, Ahli United Bank retreated 1.45 percent, dragging down the index  0.5 percent to 1,832 points.

The Qatar benchmark edged up 0.02 percen