"There is a good recovery happening globally and economic fundamentals of the region are a lot better than what it was a while back," said Keith Edwards, head of asset management at Doha-based investment company The First Investor.

Trading in Agility's stock had been halted on the Kuwaiti bourse since April 1, as it delayed release of its 2009 financial results pending clarity on its negotiations with US authorities over fraud charges.

Kuwait's index eased 0.03 percent to 7,549 points as Agility's gain was partly offset by a 1.5 percent drop in telecom operator Zain.

On Sunday, Agility posted a 22 percent rise in fourth-quarter profit and declared a surprise cash dividend. However, analysts remained skeptical on the stock in the absence of a settlement on US fraud charges.

"Markets seem to be happy about the earnings and dividend announcement. This may be pushing the optimists but still the margin of risk is very high in the stock," said Naser Al-Nafisi, general manager for Al-Joman Center for Economic Consultancy in Kuwait.

Saudi Arabia's Riyad Bank suffered its biggest one-day drop in 17 months as the lender's stock plunged 6.8 percent after saying it booked $66.7 million in first-quarter provisions.

The Tadawul All-Share index (TASI) dropped 0.17 percent to 6,883.14 points, snapping a three-day rally. Six of the fifteen sectors on Monday closed with losses, which ranged from 0.05 percent in the Telecom & IT sector to 1.43 percent in the Banks & Financial services sector. Positive sector movement is still seen in 9 sectors, with gains ranging from 0.07 percent in both the Media & Publishing sector and the Hotel & Tourism sector, ranging up to a gain of 1.03 percent in the Petrochemical Industries. However based on individual company movement, market breadth was negative, with 55 advancers losing out to 63 decliners, recording an AD ratio of 0.87, the Jeddah-based Financial Transaction House (FTH) said in its daily market commentary.

Bahrain's biggest lender, Ahli United Bank surged 9.6 percent. Up to five Qatari individuals are aiming to buy a 25-percent stake in the bank, with the aim of turning it into a wholly Islamic bank, a source told Reuters.

Emaar Properties rose 2 percent to help Dubai index close higher for the second straight session. The index gained 0.5 percent to 1,834 points.

Qatar's index rose for the eighth straight session helped by Commercial Bank of Qatar (CBQ) which climbed 2.3 percent. The index rose 0.2 percent to 7,738 points.

"I think the market is really on its way to levels of 8,000 points," said Samer Al-Jaouni, general manager of Middle East Financial Brokerage Co.

Analysts say investors are expecting better first-quarter results and hence building positions ahead of announcements.

"It looks like investors pretty much expect first-quarter results to be better on a sequential basis," said Robert McKinnon, ASAS Capital chief investment officer.

In Egypt, market heavyweight Orascom Telecom climbed 2.9 percent on continued speculation that the mobile firm will sell its Algerian unit Djezzy. The index rose 0.9 percent to 7,515 points.
 
- With input from agencies