DUBAI - Investors were in a selling mood on most Gulf Arab markets on Tuesday, as the previous day's gains were mostly cancelled out.

Analysts predict the volatility in regional bourses to continue, as the markets correct after a rally which preceded third quarter reporting season.

Dubai's index slumped 5 percent for the second time in the week, after surging by the same percentage on Monday, its largest one-day gain since February.

"Generally speaking the outlook for shares is still in doubt," says Chamel Sahmy, regional senior sales trader at Beltone Financial.

"There are still a number of fronts that could deteriorate. The correlation with international markets is affecting our performance and volatility will persist."

Real estate and related stocks were the main drag on benchmarks in Dubai and in Abu Dhabi. Bellwether Emaar Properties slumped 7.3 percent and Arabtec declined 6.2 percent.

In Abu Dhabi, Aldar Properties fell 4.9 percent.

"The volumes were not bad. But the market is correcting, and it will take some time," said Moussa Haddad, head of Middle East equities desk at National Bank of Abu Dhabi.#

"We are likely to see a very volatile month. However, long term investors should be holding positions, and will be waiting for end of year results."

Index heavyweights and financials were the main drag on the Saudi benchmark, Saudi Basic Industries Corp declined 3.9 percent, and Al Rahji bank, the country's largest listed lender, fell 2 percent.