Kuwait and Bahrain also claimed milestone highs as dual-listed Ahli United Bank (AUB) surged ahead of a slated stake sale and Saudi Arabia ended a three-day losing streak. Dubai slumped to a two-week low. 

QNB climbed 0.4 percent to 138 riyals, with the stock up 21 percent this year.

"QNB's earnings are driven by its strong underlying performance and benign asset quality," HC brokerage wrote in a note, keeping a hold rating and target price of 160.80 riyals.

Commercial Bank of Qatar climbed 1.2 percent and Masraf Al-Rayan added 4.2 percent. The index rose 0.2 percent to its highest finish since Oct. 22, 2008. 

"Qatar is on everyone's radar this year, given its massive GDP projections," says Matthew Wakeman, EFG-Hermes managing director for cash and equity-linked trading.

"Some investors were waiting for a pull-back to come into the market, but this hasn't really happened."

These investors are now increasingly buying in, Wakeman said. Index volumes hit a three-week high. Qatar's GDP is set to grow 16.1 percent in 2010.

AUB rose 3.8 percent in Bahrain and 4.4 percent in Kuwait after saying a Gulf investor had agreed to buy a 25 percent stake in a deal estimated at $1.32 billion.

Both listings are up by more than a third since March 28 as talk of a deal drew in buyers ahead of Tuesday's statement.

Bahrain's measure climbed 0.7 percent to 1,606 points - its highest close since June 25, while Kuwait's benchmark rose 0.2 percent to 7,575 points - a 24-week high.

Dubai's index fell 2.1 percent to 1,800 points - its lowest close since March 24, the day before Dubai World unveiled a debt restructuring offer.

"Stocks had a good run up before the (March) Dubai World announcement and a few things still have to be ironed out," said EFG's Wakeman.

Arabtec fell 3.4 percent, extending its retreat from Sunday's three-month high. It had surged after Dubai World said it would pay contractors, which include Arabtec.

"People are selling ahead of earnings," said Wakeman.

Abu Dhabi Commercial Bank, one of two domestic lenders on a Dubai World creditors' committee, fell 3 percent.

Sluggish UAE economic growth and soaring provisions are seen weighing on domestic banks' quarterly results.

"More bank provisions are priced in and I doubt the numbers will justify investors taking cash of the table," added Wakeman.

In Saudi Arabia, the Tadawul All-Share Index (TASI) increased 0.23 percent to 6,774.98 points. On the sector front, seven sectors closed negatively, with losses that ranged from 0.02 points in the Insurance sector, to a loss of 0.81 percent in the Media & Publishing sector. On the other hand, seven sectors closed positive, with gains ranging from 0.03 percent in the Real Estate Development sector, to a gain of 1.30 percent in the Building & Construction sector. The only sector that showed no change was the Energy & Utilities sector. Overall market breadth was basically neutral, with a slight negative bias, as the market saw 55 advancers and 56 decliners, registering an AD ratio of 0.98, the Jeddah-based Financial Transaction House (FTH) said in its daily market commentary.

Retailer Jarir Marketing Co. rose 1.9 percent after reporting a 10 percent a rise in first-quarter profit, sparking a late rally that lifted Saudi Arabia's index.

Yanbu Cement dropped 1.1 percent after reporting a 19 percent fall in first-quarter earnings.

"Market sentiments were mostly dull amid a drop in Q1 earnings by Yanbu, creating apprehension (over) quarterly earnings," said Mohammed Ishaq Ali, a fund manager at Al-Rajhi Capital. "There is no catalyst to push the market upward."
 
- With input from agencies