These gains helped Saudi Arabia's index rise for a second day as Middle East markets remained lackluster, dogged by low trading volumes and doubts about the world economy. The Tadawul All-Share Index (TASI) edged higher by 0.26 percent to close at 6,106.75 points. The sector activity for the day was mostly positive with 12 out of 15 sectors ending with gains ranging from 0.20 percent by the Industrial Investment sector to 2.39 percent by the Energy & Utilities sector. On the other hand the losses were seen in 3 sectors namely Banks & Financial Services sector, Insurance sector and Cement sector with respective losses of 0.11 percent, 0.30 percent and 0.36 percent. The overall market breadth for the day was positive with 72 advancers against 44 decliners giving it an AD ratio of 1.63, the Financial Transaction House (FTH) said in its daily market commentary.

"Domestic liquidity continues to be on the sidelines waiting for more visibility on the global scene," said Rami Sidani, Schroders Middle East head of investment. "There isn't enough risk appetite for international fund managers to go beyond the MSCI emerging markets index and invest in Gulf markets." 

SEC climbed 2.6 percent to SR13.85, its largest gain since July 24.

Saudi Cable Co. rose 3.96 percent to SR14.45 and Middle East Specialized Cables Co. gained 1.7 percent to SR18.05.

"Saudi Electricity's move sparked a rally in infrastructure stocks," said a Riyadh trader who asked not to be identified.

Egypt's index climbed 1.6 percent to 6,486 points, its largest gain for seven weeks.

Orascom Telecom (OT) rose 4.1 percent on talk that Chairman Naguib Sawiris might sell some assets to telecoms group Vimpelcom, while EFG-Hermes rose 2.7 percent, extending gains since it bought a $542 million majority stake in Credit Libanais.

Kuwait's index fell for a first session in three as investors booked profits in some banks. The index dropped 0.2 percent to 6,675 points.

Most lenders' shares had risen since Thursday after reports the government had given the go-ahead for banks to finance a 30 billion dinar ($104.2 billion) state development plan.

Commercial Bank fell 2.2 percent and Ahli United Bank dipped 1.9 percent. 

"Some banks are now trading at three times price-to-book ratio and are beginning to look overvalued," said a Kuwait trader who asked not to be identified. 

Dubai's benchmark climbed 0.6 percent to 1,500 points, its highest finish for two weeks, although volumes were lackluster.

The Abu Dhabi index climbed 0.2 percent to 2,509 points.

"I think we might see some movement before the end of this week," said Samer Al-Jaouni, general manager of Middle East Financial Brokerage Co. "Global markets fell on Thursday and Friday, yet we didn't see any reaction regionally yesterday, which is a positive sign." 

Qatar's benchmark rose 0.3 percent to 7,199 points - a three-month high. "Qatar is picking up in terms of volume and value, with appetite from foreign investors increasing, especially for the blue chip industrials and banks," added Jaouni.

Qatar and Egypt are the only benchmarks that are up this year, but others may rally in the fourth quarter, said Sidani, when a large portion of state spending occurs.

"Governments usually start the year cautiously as they wait to see what the average oil price for the year is likely to be," Sidani added. "We're now approaching the end of 2010 and oil prices are stable, which will give comfort to governments to increase spending."

The Omani index edged up 0.03 percent to 6,310 points.

The Bahrain index rose 0.7 percent to 1,419 points.
 
- With input from agencies