Nov 5 (Reuters) - Major stock markets in the Gulf

fell in early trade on Wednesday, tracking Asian shares lower

after an overnight tech-led sell-off on Wall Street put the

spotlight on stretched valuations.

Stocks are retreating from record highs on fears equity

markets may have become overstretched after the CEOs of Wall

Street heavyweights Morgan Stanley ( MS ) and Goldman Sachs ( GS )

questioned whether sky-high valuations can be sustained.

MSCI's broadest index of Asia-Pacific shares outside Japan

fell as much as 2.3%, the most since early

April, and last traded 1% lower.

Saudi Arabia's benchmark index dropped 0.8% and was

on course for a fifth consecutive session of losses, hit by a

1.3% fall in Saudi National Bank and a 1% decline in

oil behemoth Saudi Aramco.

Among other losers, utility firm Saudi Electricity Co

plunged 4.6% following a decline in quarterly net

profit.

The headwinds from Wall Street's elevated valuations may

spill over into the Saudi market.

Despite Aramco's solid earnings and oil prices holding

around the mid $60s per barrel, the latest global equity

sell-off has exposed a latent sensitivity to high valuation

levels that have gone untested for some time, said Ahmad Assiri,

research strategist at Pepperstone.

"This recent downswing, the steepest since early October,

could translate into mild selling pressure on (Saudi stocks)

due to the overall correlation between global equity

markets."

Crude prices dipped amid a wider slump in financial markets

and a strong U.S. dollar, while investors assessed the supply

outlook.

In Abu Dhabi, the index eased 0.2%, with ADNOC

Drilling losing 0.5%.

The drilling unit of Abu Dhabi's state oil giant has signed

a definitive deal to acquire an 80% stake in MB Petroleum

Services for an enterprise value of $204 million.

Dubai's main share index fell 0.3%, pressured by a

1.1% drop in blue-chip developer Emaar Properties .

The Qatari index lost 0.4%, with Qatar Islamic Bank

falling 1.1%.