DUBAI: Dubai stocks hit a fresh 11-month high on Sunday as liquidity started to return to the market amid rising investor optimism following signs that Dubai could raise up to $10 billion in a bond issue this quarter.

Dubai’s benchmark rose 1.2 percent to 2,325 points. A Dubai ruling council member said in remarks aired on Friday that the government could issue the second tranche of a $20 billion government bond program as soon as this month, but did not give the exact size of the issue.

Star performers were Emaar Properties and Drake & Scull, which advanced 2.7 percent and 2.5 percent respectively.

Investors “are progressively becoming more optimistic and we are seeing liquidity coming back to the capital markets,” said Ayman El-Saheb, Darahem Financial Brokerage director of operations. “But I am extremely cautious, let’s try to hold on to these gains and try to grow from here,” he said.

Abu Dhabi’s benchmark also posted gains, up 1.2 percent to 3,230 points. Two of the largest banks on the index, National Bank of Abu Dhabi and First Gulf Bank, climbed 2.9 percent and 2.7 percent.

“Though risks to earnings still remain, Abu Dhabi is proving more resilient to the economic slowdown,” according to a recent EFG Hermes research report.

“Supported by the government, balance sheets have strengthened over the year, and banks appear to be in much better shape than was feared,” the analysts said.

Banking stocks led Saudi Arabia’s TASI index to close 0.5 percent higher at 6,400 points.

Al-Jazira Bank shares soar 8.2 percent, while Banque Saudi Fransi gains 3.4 percent.

Saudi Fertilizers slips 2.1 percent after reporting an almost 75 percent drop in third-quarter profit on Saturday.

“Today we closed right below the psychological support of 6,400 at 6,399. This breakout is positive for the market and we may have seen the intention of the market for the coming leg. Nonetheless, we remain relatively range bound considering earnings are still being released.

“Most companies continue to report losses on a year on year basis, however these are anticipated and may not be as bad as expected,” said the Jeddah-based Financial Transaction House (FTH) in its daily market commentary

Industries Qatar, the largest stock by market value in the country, fell 1.5 percent, weighing on the main index, which retreated 0.4 percent.

Egypt’s main stock index rose 1.5 percent to recoup losses made over the past week.

— With input from agencies