UPDATE 4: Late rally helps Kuwait's index KWSE end higher for a second session.
National Industrialisation Co (Tasnee) made its largest gain for five months, helping the Saudi index TASI bounce back to 17-month highs as investors target the stock, which has underperformed rival petrochemical producers. Tasnee climbed 4.2 percent. To Monday's close, the stock was up 2.8 percent year-to-date, while rival Saudi Basic Industries Corp (SABIC) had gained 16 percent over the same period.
"Tasnee has underperformed the petrochemicals sector, which is showing continued strength, so investors targeted the stock today," says Saleh al-Onazi, vice-president of principal investment at Swicorp in Riyadh.
SABIC climbed 1.6 percent to be just below this week's 17-month high.
"As long as oil holds above $80 we will be okay," adds Onazi.
The index rose 0.7 percent to 6,739 points, bouncing back to its highest close since October, 2008, after falling on Monday.
Oil was down 0.1 percent at $81.50 a barrel at 1244 GMT.
Dubai's index DFM hit a 10-week closing high, but trading volumes are waning, which may point to a weakening uptrend.
Drake & Scull International climbed 2.1 percent after saying it had won AED1bn of contracts in the first quarter.
Emirates NBD rose 3.5 percent. The bank is heavily exposed to indebted Dubai World and investors are betting the government conglomerate will make a restructuring offer more favourable to creditors than currently priced into the stock.
The index rose 0.7 percent to 1,776 points, its highest close since Jan. 11. Trading volumes have fallen by nearly half this week from the week before, slumping to a daily average of 263 million from 459 million last week.
"The situation in Dubai is not clear and so one can't bracket Dubai within the same trend as other Gulf markets," said Adel Nasr, United Securities brokerage manager.
"Foreign money is coming into Saudi Arabia, Qatar and Oman - foreign investors are still worried about Dubai and would prefer to wait until they get a clearer view on Dubai World."
Abu Dhabi's index ADI edged up 0.1 percent to 2,860 points. Emirates Telecommunications Corp (Etisalat) was the main support, adding 0.8 percent.
A late rally helped Kuwait's index KWSE end higher for a second session, with National Investments Co (NIC) a major gainer as investors bought in ahead of Zain's possible $9bn African asset sale.
The Kharafi group was a major shareholder in both NIC and Zain, with investors betting an asset sale would benefit affiliated companies. NIC climbed 2.2 percent to a 20-week high.
"There was a lot of buying in NIC on speculation Zain's board will approve its asset sale," said Essa al-Hasawi, a dealer at Noor Financial Investment Co in Kuwait.
The deadline for exclusive talks between Zain and India's Bharti Airtel is Thursday.
Kuwait and Gulf Link Transport Co (KGL) surged to an 18-month high after saying it has bid for US army contract tenders, but no winners have been announced yet.
The stock rose 8.1 percent to its highest level since Sept. 1, 2008, while its affiliate KGL Logistics climbed 6.2 percent to a record high.
"People are speculating the company will win these projects, especially since Agility's court case," said Hasawi.
Agility was indicted by a US court on fraud charges in November. At the time, Agility said it had had been suspended, but not debarred, from new U.S. government contracts pending the outcome of the indictment.
The index closed 0.4 percent higher at 7,451 points.
Industries Qatar was the main support as Qatar's index QSI hit a 23-week high, but banks were mixed with some investors booking profits from last week's surge.
IQ climbed 0.9 percent and Qatar National Bank added 0.6 percent. Commercial Bank of Qatar dropped 0.5 percent and Doha Bank lost 0.2 percent.
Last week, the central bank said banks would soon be allowed to buy stocks again, spurring a financial sector rally, which helped the index surge 8.8 percent in eight sessions.
The index climbed 0.3 percent to 7,416 points, its highest close since Oct. 12.
Oman's index MSI hit a four-week closing high as retail investors chased dividend yields and institutions buy into banks.
Bank Muscat climbed 1.5 percent to 0.855 rials. On Monday, NBK Capital gave the stock an 'accumulate' rating, setting a fair value of 0.928 rials.
"Today, there continued to be good support from local, regional and international institutions buying into bank stocks," says Adel Nasr, United Securities brokerage manager.
Al Anwar Ceramic Tile was the most active stock, accounting for almost a sixth of all shares changing hands on the index, as it climbed 2.3 percent.
"We're seeing retail flow coming back in, especially for the high dividend yield stocks like Anwar Ceramic," said Nasr.
"Bank interest rates are 2-3 percent, while most dividends are paying about 4 percent, so retail investors are switching from bank deposits to stocks."
Oman's index MSI climbed 0.4 percent to 6,765 points, its sixth straight gain and highest close since Feb. 21. (Reuters)