DUBAI, Jan 4 (Reuters) - United Arab Emirates stock markets fell in early trade on Monday because of a sharp drop of Asian bourses and rising geopolitical tensions in the Gulf after Saudi Arabia cut diplomatic ties with Iran.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 2.6 percent in response to weak Chinese manufacturing data and the Chinese central bank's decision to fix the yuan at a 4-1/2-year low.
The Dubai stock index fell 0.9 percent in the first 10 minutes in a broad sell-off; real estate blue chip Emaar Properties was down 1.8 percent.
Abu Dhabi's index was down 0.2 percent and real estate shares there were also weak.
The UAE is Iran's fourth largest trading partner and the International Monetary Fund has estimated the lifting of economic sanctions on Iran early this year could add 1 percentage point to the UAE's gross domestic product growth between 2016 and 2018 through trade. There have also been hopes of increased Iranian real estate investment in the UAE.
Dubai, with its sophisticated trading infrastructure, could grab most of those benefits - but any benefit could be reduced or delayed by political tensions.
(Reporting by Andrew Torchia)