UPDATE 2: Speculators move in after bluechip stock breaks resistance levels.
Dubai's index mades its largest gain for three months as investors bet on a favourable Dubai World debt offer.
The troubled government conglomerate is expected to announce a multi-billion dollar debt restructuring plan shortly.
Dubai Financial Market climbed 9.6 percent to a nine-week high, while Emaar Properties added 7.5 percent and Shuaa Capital rose 11.5 percent. The latter has appointed a new chief financial officer.
"Stocks are undervalued compared to other markets, but the confidence is not back yet," said Samer al-Jaouni, General Manager of Middle East Financial Brokerage Co.
Dubai's benchmark climbed 3.7 percent to 1,747 points, its biggest one-day gain since December 14 and highest close since December 12.
DP World, which is listed on the later-closing Nasdaq Dubai, is up 6.2 percent. It is majority-owned by Dubai World.
Abu Dhabi's index rose 1.2 percent to 2,868 points, its highest finish since November 25, the day Dubai World asked for a debt standstill.
Aldar Properties added 2.5 percent. Abu Dhabi Commercial Bank, which is among Dubai World's major domestic creditors, rose 5.8 percent.
"Traders are focusing on Dubai rather than Abu Dhabi, because Dubai is more likely to benefit from any news (on Dubai World) than Abu Dhabi," added Jaouni.
Bank Dhofar was the main drag as Oman's index ended lower for a third session in four, with volumes falling to a two-week low.
Bank Dhofar dropped 2 percent and other lenders also struggled, with Oman International Bank losing 2.2 percent and National Bank of Oman slipping 0.3 percent.
"The (earnings) results are out and discounted and there is no positive or negative news in the region or internationally," said Sayed Quadry, vice-president of business development at Amwal Investment in Muscat.
"The big guys are outside the market - any moves you see are from smaller players trying to make gains here and there."
The index slipped 0.1 percent to 6,641 points.
"I see the market continuing in the same pattern - up for a couple of days then down for a couple days - sentiment is slightly better than last month, but any negative news will hurt," added Sayed.
Samba Financial Group helped push Saudi Arabia's index to a new 17-month high as investors continued buying ahead of possible greater foreign involvement on the bourse.
Samba climbed 0.8 percent and Saudi Electricity Co added 1.6 percent.
The index rose 0.2 percent to 6,599 points to its highest level since mid-October 2008. It is up 1.9 percent since March 6, when the head of its capital markets authority told newspapers that Saudi Arabia wants to increase foreign activity and has considered exchange-traded funds (ETFS).
"The rally seems to have further room to go and traders should hold on to their positions while dynamically increasing their protective stops," Shuaa Capital wrote in a research note.
Commercial Bank of Qatar (CBQ) hit a 19-week high and other banks also advanced, lifting Doha's index.
CBQ rose 2.8 percent to its highest level since October 29. Qatar Islamic Bank added 1.1 percent and Doha Bank climbed 2 percent.
The index rose 0.4 percent to 6,846 points.
Industries Qatar continued to weigh, slipping 0.1 percent to take its losses to more than 3 percent since it reported disappointed earnings earlier this month. IQ is trading at a price to earnings ratio of less than half that of regional rival Saudi Basic Industries Corp (SABIC).
"Relative to SABIC, IQ is underpriced, but the structures of the companies are rather different," said Keith Edwards, head of asset management at Doha-based investment company The First Investor.
"World markets are quite bullish, so normally one would expect a global cyclical company like IQ to move up, but SABIC's liquidity and structure makes it a better investment play on global growth. SABIC is also a more dynamic company.
"IQ's dividend was not that impressive and that has weighed on the stock - Qatar is a market typified by quite high dividend yields and the lower dividend stocks have been eschewed."
Meanwhile, Banks weighed as Kuwait's index retreated for a second session in three and technical analysis pointed to further declines.
Commercial Bank of Kuwait was flat after reporting slumping full-year earnings, while National Bank of Kuwait dropped 1.7 percent and Gulf Bank lost 1.4 percent.
Zain rose 1.5 percent, equalling Thursday's 19-week high. The operator is in exclusive talks to sell some African assets to India's Bharti Airtel in a $9 billion deal.
The index slipped 0.1 percent to 7,452 points.
"We could see a correction to 7,200 points," NBK Capital wrote in a research note. "This is a buying opportunity."
Investors should place a stop loss at 7,090 points, NBK added.
Global Investment House rose after reporting a narrowing fourth-quarter loss.
Global climbed 4 percent. It made a quarterly loss of KD44.6 million ($154.9 million), compared with a loss of KD360.5 million for the corresponding period of 2008.
Kuwait's index rose 0.2 percent to 7,472 points.