DUBAI- Gulf stock markets fell back on Tuesday after geopolitical news from Yemen and Qatar that has heavily influenced the bourses for weeks turned negative.

Markets rose early this week after former Yemeni president Ali Abdullah Saleh offered to ally with a Saudi Arabian-led coalition in his country's conflict, and because of hopes that Qatar's diplomatic isolation might end.

But Saleh was killed by Iran-aligned Houthi militia in Sanaa on Monday, a morale boost for the Houthis that analysts said could prove a serious blow to the Saudi coalition.

Meanwhile, it became clear that the rulers of Qatar and Kuwait were the only two heads of state set to attend an annual summit of Gulf Cooperation Council nations in Kuwait this week, and Qatari broadcaster Al Jazeera reported that the summit had been cut to one from two days because of political tensions.

This appeared to dash hopes that the summit might work towards resolving Qatar's dispute with four other Arab states. The United Arab Emirates said it wanted to create a bilateral committee with Saudi Arabia on economic, political and military issues, suggesting the GCC might be becoming irrelevant.

The Saudi stock index .TASI dropped 0.5 percent after rising for nine straight days. Najran Cement 3002.SE fell back 3.3 percent after soaring along with other cement stocks in the past two days.

The Qatari index .QSI fell 0.2 percent after surging 2.2 percent on Monday. However, real estate developer Ezdan Holding ERES.QA , which has been hit hard this year by a property market slump deepened by the diplomatic crisis, climbed 8.6 percent and was the most heavily traded stock.

Ezdan said in May that it planned to go private, and some traders said shareholders might be trading the stock to ensure a minimum price when that happened.

Dubai's index .DFMGI sank 1.1 percent in a broad-based decline; eight of the 10 most heavily traded stocks fell. Real estate blue chip Emaar Properties EMAR.DU lost 1.8 percent.

Egypt's index .EGX30 fell 0.8 percent as Commercial International Bank slipped 1.3 percent.

But Giza Contracting GGCC.CA surged 6.2 percent in its heaviest trade since February 2016 after its board approved the creation of a real estate investment unit with authorised capital of 500 million Egyptian pounds ($28.3 million).



HIGHLIGHTS



SAUDI ARABIA



* The index .TASI dropped 0.5 percent to 7,067 points.



DUBAI



* The index .DFMGI fell 1.1 percent to 3,394 points.



ABU DHABI



* The index .ADI dropped 1.5 percent to 4,264 points.



QATAR



* The index .QSI slipped 0.2 percent to 7,912 points.



EGYPT



* The index .EGX30 fell 0.8 percent to 14,461 points.



KUWAIT



* The index .KWSE edged down 0.1 percent to 6,214 points.



BAHRAIN



* The index .BAX fell 0.2 percent to 1,272 points.

(By Andrew Torchia, editing by Gareth Jones) ((andrew.torchia@thomsonreuters.com)(+9715 6681 7277)