(Updates to closing prices)

By Ateeq Shariff

March 16 (Reuters) - Most Gulf stock markets ended lower

on Monday, led by losses in Dubai as the U.S. and Israel's war

with Iran weighed on investor sentiment.

Over the weekend, Trump threatened further strikes on Iran's

Kharg Island - which accounts for roughly 90% of the country's

oil exports - after earlier attacks on military targets prompted

a defiant response from Tehran and raised the prospect of

further retaliation.

Shortly after the attacks on Kharg, Iranian drones struck a

major oil terminal in Fujairah, United Arab Emirates. Although

oil loading operations at Fujairah have resumed, four sources

said it was unclear whether activity has fully returned to

normal.

Dubai's main share index declined 2.5%, dragged

down by a 4.9% slide in blue-chip developer Emaar Properties

and a 1.7% retreat in top lender Emirates NBD

.

Since the conflict began, the index has shed more than 18%,

bringing its valuation down to 843.25 billion dirhams ($229.61

billion).

Citigroup ( C ) is keeping most branches and offices in the UAE

closed until further notice after temporarily closing them last

week, the bank said on Monday, the latest sign of the impact on

the industry of the Iran war.

Gulf equities are showing a growing divergence as the

regional conflict drives a swift repricing of risk amid

persistently high trading volumes, said Ahmad Assiri, research

strategist at Pepperstone.

"While the overarching narrative remains anchored by energy

fundamentals, the price action reveals a market at a crossroads

where investor conviction is being tested by shifting security

dynamics in critical maritime corridors."

In Abu Dhabi, the index lost 0.2%, hit by a 3.5%

drop in Aldar Properties.

Meanwhile, the bourse's market capitalization has shrunk to

$771.9 billion, down nearly $77.2 billion from pre-conflict

levels.

Earlier this month, the Dubai and Abu Dhabi exchanges

introduced a temporary 5% daily downside limit on listed

securities and suspended trading on March 2 and March 3, as part

of broader measures to curb volatility and maintain orderly

market conditions.

Saudi Arabia's benchmark index gained 0.6%, led by a

1.1% rise in the country's biggest lender by assets Saudi

National Bank .

According to Assiri, Saudi Arabia's TASI stands out as the

region's clearest dip-buying story, with equities showing

notable resilience by testing the key 11,000 level before easing

slightly ahead of the Eid holiday. The trading pause could offer

a timely breather as global efforts intensify to secure energy

routes through the Strait of Hormuz.

However, oil major Saudi Aramco eased 0.2%.

Oil prices were mixed, with benchmark Brent crude slightly

higher and U.S. crude prices down amid attacks on Gulf oil

production and Trump's call for global efforts to secure the

Strait of Hormuz.

The Qatari index fell 1.2%, with Qatar National Bank

, the Gulf's biggest lender by assets, losing 2%.

Oman's index was down 0.7% and Bahrain's

dropped 1.8%.

Boursa Kuwait lost 0.4%.

Outside the Gulf, Egypt's blue-chip index slipped 1.6%,

as most of its constituents were in the negative territory.

($1 = 3.6726 UAE dirham)