Investor fears could prove hard to calm after last week's turmoil on the global markets.
Nerves have been frayed by roller-coaster rides in Asia and Europe following the results of elections in France and Greece, which pushed the MSCI World Index of global equities down 1.7 per cent.
Last week, both the Abu Dhabi Securities Exchange General Index and the Dubai Financial Market (DFM) General Index fell for their second week in a row.
The sell off pushed the DFM General Index down 4.2 per cent as the index hit its lowest level since the start of February.
The Middle East's weak performance was the result of a correction after the significant headway made at the start of the year, analysts from Capital Economics wrote in a research report.
"Fresh hopes that some equity markets in the Middle East and North Africa (Mena) had turned a corner at the start of 2012 have quickly faded," the report said.
"The Mena region's early winners - namely Egypt, Saudi Arabia and Dubai - have seen heavy losses since the highs reached in the first quarter ... This is consistent with our view that the earlier rallies in some of the Mena's markets were unsustainable."
But the trading volumes on local stock markets are likely to get worse before they get better as summer sets in, the report added.
"Investors are beginning to lose interest in the region's markets with trading volumes dipping over the past couple of months," it said.
What should help trading in the UAE is that a handful of companies are expected to report earnings this week.
These include Abu Dhabi Islamic Bank and NMC Health, a healthcare company based in Abu Dhabi, which is due to announce results on Tuesday. NMC is revealing its financial position for the first time since listing on the London Stock Exchange this year.
But with much of the Emirate's companies having already reported earnings, local traders have warned that markets could be fuelled by external factors.
"You might see all of the markets ticking up again. They're all indicating an early upswing," said Talal Touqan, the head of research at AlRamz Securities. "There's no fundamental grounds for what's happening."
Political concerns could also weigh on traders' minds during the week ahead, as talks resume on Monday between Iran and the International Atomic Energy Agency over the country's nuclear programme.
Meanwhile, Egypt will enter the final stages of preparation for its first democratic presidential elections on May 23 and 24, after the overthrow of Hosni Mubarak in February last year.
In the US, economic data showed positive signals again after last week's disappointing jobs report.
The Thomson Reuters/University of Michigan index of consumer confidence in the world's largest economy rose to 77.8 from 76.4 in April, topping economists' forecasts and hitting the highest level since January 2008.
Oil prices sank nonetheless, with Nymex crude continuing the slide that has seen it fall during eight of the past 10 trading sessions. The US benchmark closed 95 cents lower at US$96.13 per barrel on Friday.
Brent futures snapped a nine-day losing streak on Friday, closing 9 cents higher at $112.60 per barrel.
The Saudi Tadawul All-Share Index closed up 0.12 per cent to 7,230 yesterday, the only Gulf market open for trading.
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