May 10 (Reuters) - Stock markets in United Arab Emirates closed lower on Friday, as investors turned cautious after the latest round of negotiations between Israel and Hamas failed to achieve the ceasefire and fighting escalated in the southern most city of Gaza.

Israeli tanks captured the main road dividing the eastern and western halves of Rafah on Friday, effectively encircling the entire eastern side of the city in the southern Gaza Strip.

Abu Dhabi's benchmark index (.FTFADGI) New Tab, opens new tab dropped 0.3%, extending losses to second session, after Abu Dhabi's largest listed firm International Holding Company (IHC.AD) New Tab, opens new tab shed 0.6% and real estate giant Aldar Properties (ALDAR.AD) New Tab, opens new tab dropped 1.6%.

Dubai's main index (.DFMGI) New Tab, opens new tab edged 0.2% down, pressured by losses in real estate sector, as blue-chip developer Emaar Properties (EMAR.DU) New Tab, opens new tab slipped 0.9%, while its construction arm Emaar Development (EMAARDEV.DU) New Tab, opens new tab decreased 1.4%.

Among the losers, foreign currency exchange firm Al Ansari Financial Services (ALANSARI.DU) New Tab, opens new tab slumped 1.9% after the firm reported 26% decline in its first-quarter net profit to 98.7 million dirhams ($26.88 million)

However, Dubai index recorded 0.7% weekly gains, ending five week of losing streak, while Abu Dhabi posted 0.6% increase after three week of losses, according to LSEG data.

Oil prices - a key catalyst for the Gulf's financial market- drifted 0.6% higher to %84.39 a barrel after data this week signalled growing demand in the U.S. and China, the world's two largest crude users.

($1 = 3.6724 UAE dirham)

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https://www.reuters.com/markets/currencies/uae-markets-fall-escalating-conflict-region-2024-05-10/