By Ateeq Shariff Dec 13 (Reuters) - Most stock markets in the Gulf ended lower on Tuesday ahead of a reading of U.S. inflation on the eve of a Federal Reserve policy decision which could set the tone for the year ahead, while the Saudi index rebounded from a 20-month low. The Fed will announce its latest policy decision on Wednesday, followed by a slew of other central banks, as markets are expecting a smaller 50 basis points hike from the Fed. But investors are focused is on its forward-looking commentary about monetary policy and the economy. Most Gulf Cooperation Council countries, including Saudi Arabia, the United Arab Emirates and Qatar, have their currencies pegged to the U.S. dollar and follow the Fed's policy moves closely, exposing the region to a direct impact from monetary tightening in the world's largest economy. In Abu Dhabi, the index dropped 1%, extending losses for a sixth consecutive session, weighed down by a 3.1% slide in the country's biggest lender First Abu Dhabi Bank . The Abu Dhabi bourse continued to record price corrections but could see a reversal if oil prices rebound more consistently in the future, Daniel Takieddine, CEO MENA at BDSwiss, said. "The market could also react to the Federal Reserve's decision." Dubai's main share index dipped 0.5%, hit by a 1.9% fall in Emirates NBD Bank. Separately, the United Arab Emirates (UAE) will host the next major meeting of the World Trade Organization set to take place by March 2024, according to three trade sources familiar with the matter, citing a preliminary agreement. The Qatari index retreated 1.6%. Saudi Arabia's benchmark index, however, bucked the trend to close 1.9% higher, a day after it hit its lowest in 20 months. Oil - a key catalyst for the Gulf's financial markets - pared gains after rising by over $1 earlier in the session, as declining optimism over a Chinese oil demand recovery capped support from supply disruptions. Outside the Gulf, Egypt's blue-chip index jumped 2.9%, as most of the stocks on the index were in positive territory including tobacco monopoly Eastern Company, which ended up 8.3%. SAUDI ARABIA rose 1.9% to 10,221 ABU DHABI fell 1% to 10,050 DUBAI down 0.5% to 3,300 QATAR dropped 1.6% to 11,184 EGYPT leapt 2.9% to 15,150 BAHRAIN eased 0.1% to 1,852 OMAN added 0.4% to 4,899 KUWAIT declined 0.4% to 8,221 (Reporting by Ateeq Shariff in Bengaluru; editing by David Evans)