Gulf Arab leaders signed a long-awaited monetary union deal on Tuesday but failed to decide on the contested location of the regional central bank, placing another hurdle before a project beset by obstacles for years.

While Saudi Arabia, Kuwait, Qatar, the United Arab Emirates and Bahrain said they would stick to a 2010 monetary union target, the bloc's secretary-general conceded it would take about another six months before they agree on where to base a joint central bank.

After a meeting sidetracked by violence in Gaza, Gulf leaders also called on officials in the top oil-exporting region to work towards stable oil prices and to co-ordinate efforts to reduce the impact of the global financial crisis.

On all matters, however, they outlined no specific policy actions. 'I'm surprised that they are still saying they are sticking to the 2010 deadline,' said John Sfakianakis, chief economist at SABB bank, HSBC's Saudi affiliate.

'This agreement is a good step forward. But as we move closer to the deadline I wish they would be more transparent and clear about the specific steps they will take. It is important for citizens and society to be aware of what it means for them.'

When Gulf leaders set a timetable for monetary union in 2001, they had envisioned drawing up the legislation for monetary union by 2005 and issuing single currency notes and coins by 2010. Various policymakers have said it would be virtually impossible to meet that deadline.

Secretary-General of the Gulf Cooperation Council (GCC), which also includes Oman, told a news conference after the summit that the 2010 deadline was still intact.

'I think it is within the time which has been allocated ... 2010,' Abdul-Rahman al-Attiyah said in response to a question about a date for a common currency.

'Let's wait until, God willing, we agree on the location (of the central bank) and the other details,' Attiyah added, saying the decision on the central bank's location should be finalised by mid-2009.

GCC officials had said earlier this year they expected Gulf leaders to make the final call on the location at this summit. Saudi Arabia, the United Arab Emirates, Qatar and Bahrain are vying to host the bank.

Key hurdles

A series of hurdles have the sent the single currency project off track in recent years; Oman decided in 2006 it would not join, just months before Kuwait severed its currency peg to a then-weak dollar in a bid to fight imported inflation.

Gulf policymakers sought to bring the project back on track this year by finalising the monetary union deal and a charter to govern the monetary council, which were approved on Tuesday.

'We are going to continue our efforts towards reaching this target. We will put a maximum effort in this respect,' Mohamed al-Mazrooei, assistant to the GCC secretary-general for economic affairs, said after the meetings.

Each member state must ratify the agreement before the region can open a monetary council, which would later be converted into a central bank much like the European Monetary Institute that preceded the European Central Bank.

Kuwait's finance minister said on Tuesday Gulf oil producers would have until December 12 next year to enact the agreement.

Some Gulf policymakers, including the UAE central bank governor, have said achieving a Gulf monetary union has become more urgent as the global financial crisis brings to an end a six-year economic boom that had been fuelled by high oil prices.

Oil prices at about a quarter of their peak in July and a global credit crisis have put the brakes on expansion projects. Saudi Arabia and Oman are projecting budget deficits next year.

In their summit communique, Gulf leaders called on their officials to work towards stable oil prices and to better coordinate efforts to reduce the impac