UPDATE 5: Saudi at new 17-month high; Kuwait makes largest drop for 4 weeks.
Dubai's index DFM reached a nine-week closing high as low valuations drew in buyers ahead of a Dubai World debt offer, which is expected to be unveiled this month. Emaar Properties climbed 4.7 percent and Dubai Financial Market added 2.8 percent.
"The market is still attractive and so retail players are taking advantage of the upside potential," said Chamel Fahmy, Beltone Financial regional senior sales trader.
"Dubai is trading at a 35 percent discount to the MENA region."
Union Properties jumped 13 percent and Deyaar added 8.7 percent.
"Whenever you see the bluechips perform very well and confidence is up, investors will then shift towards the smaller names and so that's why we're seeing the likes of Union Properties and Deyaar do so well," adds Fahmy.
The index climbed 2.1 percent to 1,758 points, its highest finish since Jan. 12.
Abu Dhabi's index ADI fell for a second day, slipping 0.2 percent to 2,861 points.
Emirates Telecommunications Corp (Etisalat) was the main drag, falling 2 percent to extend losses since hitting a dividend-driven five-month high on Sunday.
Samba Financial Group led gainers as Saudi Arabia's index hit a new 17-month high. Samba climbed 3.8 percent. The lender is talking to several banks about a dollar-denominated international bond issue."Samba's news gives good sentiment on banks," said Saleh al-Onazi, vice-president of principal investment at Swicorp in Riyadh.
Banks hugely underperformed the market last year as investors fretted over provisions from bad debts, but Samba's bond move helps erase some of these doubts, Onazi said. The bank sector accounts for more than 40 percent of shares changing hands on the index as Al-Rajhi Bank added 0.6 percent.
Saudi Basic Industries Corp (SABIC) ended 1.3 percent higher, hitting a 17-month high, buoyed by firm oil prices. Crude rose 0.6 percent to $80.25 a barrel at 1244 GMT.
The index climbed 0.5 percent to 6,614 points, its highest finish since October 2008.
Doha's index QSI rose to a 12-week high as volumes spiked after the market regulator gave the go ahead for Qatar banks to trade shares on the bourse.
"This was a big incentive for the market today - the main problem over the past few months has been the low trading volumes, so this move will be supportive of liquidity," said Hani Girgis, assistant chief dealer at Dlala brokerage.
Industries Qatar (IQ) climbed 3.4 percent, Qatar National Bank (QNB) rose 3.9 percent and Al Khaliji Bank added 1.7 percent.
"If I want to move the index higher, IQ and QNB are the first stocks I would choose," added Girgis.
Barwa Real Estate climbed 3 percent after reporting rising full-year profit.
The index rose 1.7 percent to 7,050 points, its highest finish since Dec. 22. Volumes hit a 14-week high.
Kuwait's index KWSE made its largest decline for four weeks as investors booked profits just below a major technical resistance level.
Zain fell 2.9 percent, easing from the previous day's 21-week high.
"If all other factors stay constant, the market is heading up, but Zain and Agility will be the drivers -- the recent market performance was down to Zain and good results from NBK (National Bank of Kuwait)," said Ammar Hajeyah, assistant vice-president at Global Investment House.
Zain is in exclusive talks to sell some of its African assets to India's Bharti Airtel in a $9bn deal. The companies have faced no obstacles in due diligence and expect to complete on time, a Kuwaiti newspaper said on Tuesday.
Agility ended flat. It was embroiled in a US court case.
NBK dropped 3.5 percent. The index fell 0.7 percent to 7,444 points, easing from Monday's 21-week high.
"There's some pressure on the market -- people are very cautious, especially with the index near a very strong resistance level at 7,500 points," added Hajeyah. "After this, the next resistance is at 7,700 points. Everyone is also cautious about company results for 2009."
Bahrain's measure BAX edged up 0.02 percent to 7,444 points.
Oman's index MSI ended higher for the first session in four as banks rallied.
National Bank of Oman added 2.9 percent and Bank Muscat rose 0.5 percent.
The index climbed 0.2 percent to 6,620 points.
"On its way down, there is an immediate support at the 6,589 level with the next support expected to appear at a lower level of 6,560," United Securities.
"On its way up, the immediate resistance is at the 6,674 level, while the next resistance is expected to be at a higher level of 6,706." (Reuters)