Shares in National Bank of Abu Dhabi rise after the lender proposed a 30 percent cash dividend
Dubai's index ends at a four-month high, tracking gains in global stocks, as traders bet on positive fourth-quarter earnings by blue chip firms.
European stocks jumped and the euro recovered from week lows after official data showed an unexpected expansion in China's powerful factories in January and the first growth in German manufacturing in four months.
Real estate stocks led the rally in Dubai, with Emaar Properties up 2.2 percent.
Builder Arabtec climbed 5 percent, closing at a near 2-year high.
"There is belief that blue chips real estate firms like Emaar will report good fourth-quarter results," said Saad al-Chalabi, technical analyst and trader at Al Ramz Securities in Abu Dhabi.
Most of the big firms are yet to report their fourth-quarter earnings.
Dubai's bourse ended 1.2 percent higher at 1,454 points, its highest close since Sept 22.
In Abu Dhabi, the index climbed to a 7-week high, helped by National Bank of Abu Dhabi that gains 1.4 percent. The lender reported its fourth-quarter net profit on Tuesday and proposed a 30 percent cash dividend.
"The dividend is good in NBAD and it has a good yield with no real risk. Traders are upbeat about it," said Al-Chalabi.
The Abu Dhabi index ended higher by 0.5 percent at 2,466 points.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.