Dubai's plans for a new US$1.6bn island project may boost investor sentiment on Thursday, but gains are likely be capped with the index nearing a major resistance level.
Dubai gave the go-ahead on an island development featuring the world's largest ferris wheel at its centre, as the emirate resumes constructing extravagant projects reminiscent of its boom years.
South Korea's Hyundai Contracting and Starneth Engineering were appointed as the primary contractors for the design and construction of the Dubai Eye.
Dubai's benchmark, up 17.3 percent so far this year, closed at 1,903 points on Wednesday, shy of the 2,000 key psychological level.
Neighbouring emirate Abu Dhabi's index rose 1.1 percent to 2,955 points, closing in on the 3,000 level.
"These are major levels and probably will provide strong resistance for the time being," says Anastasios Dalgiannakis, institutional trading manager at Mubasher, adding profit-taking was a possibility after the significant move higher this year.
Shares in engineering firm Drake & Scull may see increased interest after the engineering firm reported a fourth-quarter profit of AED46m, down from AED65m in the year-earlier period.
Elsewhere, Oman's bluechip Bank Muscat said on Wednesday it will complete a capital hike via private placement by the end of February. The bank has gained 1.5 percent in the last two sessions.
Asian shares rose on improving risk sentiment while the yen steadied ahead of the weekend meeting of G20 finance and central bank officials, as investors scrutinise their views on global growth and differences over currencies.