UAE markets slipped on Tuesday, with investor little swayed to buy ahead of second-quarter earnings, while banks were steady despite three international lenders withdrawing from debt restructuring talks with Dubai Group.

Dubai Investments Company was the main drag, falling 2.4 per cent.

Emirates NBD, Dubai's largest bank by market value, slipped 0.4 per cent, while Dubai Islamic Bank added 0.5 per cent.

Royal Bank of Scotland and two other banks have abandoned talks on restructuring Dubai Group's $10 billion debt and threatened legal action, sources told Reuters.

'It was quite surprising seeing such a lack of reaction - bids were soft and not different from the pattern over the last week or so,' said Julian Bruce, EFG-Hermes director of institutional equity sales.

'The majority of investors who are watching events unfold are quite used to small surprises and are happy to stay on sidelines until further developments.'

Dubai's index extended declines for a third day, closing 0.2 per cent lower at 1,488 points. It is down 16.3 per cent from early March's 16-month peak, but is still up 10 per cent year-to-date.

Abu Dhabi's measure closed 0.2 per cent lower at 2,475 points.

'If there is no immediate upside, people will trim positions, hence the weakness. No one wants to put in positions in front of Q2 numbers,' Bruce added.-Reuters