Abu Dhabi's stock market index dropped to its lowest in 15 months on Friday on fears that the fighting between Israel and Hamas could spark a wider regional conflict, while Dubai's index hit a four-month low.

Israel has vowed to wipe out the Hamas Islamist group that rules Gaza, after its gunmen burst through the barrier fence surrounding the enclave on Oct. 7 and rampaged through Israeli towns and kibbutzes. Israel has made clear that a command to invade Gaza is expected soon.

Dubai's main index declined 1.5%, extending losses for the 13th straight session, as majority of stocks were trading in negative territory. Dubai's top lender Emirates NBD Bank dropped 3.8%, while Emirates Central Cooling System Corporation slipped 5.4%. The Dubai index posted its biggest weekly decline since May 13, 2022 with a 5.4% loss, while Abu Dhabi dipped 1.9% on a weekly basis, based on LSEG data.

"Risk aversion continued to weigh on the Dubai stock market as it extended its price corrections," George Pavel, General Manager at Capex.com Middle East, said.

"Although the local economy remains on a strong footing, concerns about the geopolitical situation could remain a significant negative factor for the market."

Abu Dhabi's benchmark index fell 1.3%, its third consecutive session of losses, with IHC-owned conglomerate Alpha Dhabi Holding sliding 6.9% and UAE's largest lender First Abu Dhabi Bank losing 2.4%. But National Marine Dredging jumped 3.2% after the company's third-quarter net profit doubled to 631.7 million dirham ($171.99 million). Abu Dhabi could see traders step up selling pressure. At the same time, rising oil prices and strong local fundamentals could help limit losses, Pavel said.

Oil prices, a key catalyst for Gulf's financial market, rose more than 1% on Friday on fears that Israel-Gaza conflict spillover to wider region could disrupt crude supply. Brent crude was up 1.24% or $1.15 to $93.53 a barrel as of 1135 GMT. ABU DHABI lost 1.3% to 9,307 DUBAI declined 1.5% to 3,752.

($1 = 3.6729 UAE dirham)

(Reporting by Mohd Edrees in Bengaluru. Editing by Jane Merriman)