The market opened on a positive note gaining 67.28 points to close at 6,373.61 points, up 1.07 percent, the Financial Transaction House (FTH) said in its daily market commentary.

"Oil was decent over the past week, moving toward the high $70s, so petrochemicals should be quite strong," said Matthew Wakeman, EFG-Hermes managing director for cash and equity-linked trading.

Oil was down 0.5 percent at $76.83 a barrel at 1344 GMT, but has gained about 3 percent since Sept. 6, the last day of trading on the Saudi bourse before a weeklong Eid Al-Fitr holiday that ended Monday.

Sector activity was mostly positively biased with all 15 sectors closing with gains ranging from 0.12 percent by the Energy & Utilities Sector and Retail Sector to 2.06 percent by the Insurance Sector. The overall market breadth for the day was strongly positive with 122 advancers against 6 decliners giving it an AD ratio of 20.33.

The momentum is expected to continue with the upward movement, the FTH said. The market in the upcoming sessions targets to break the next immediate resistance of 6,400 points. The liquidity for the day reached SR2.24 billion.

In Kuwait, Zain rose 3.1 percent to a 16-week high and small- to mid-cap banks also advanced as local investors bought on the first day's trade since the Eid Al-Fitr holidays, playing catch up with gains on regional and global markets.

"There are continued rumors that Kharafi might sell a stake in Zain -- usually after Eid the rumors increase and so this has pushed Zain's shares higher," said Naser Al-Nafisi, general manager for Al-Joman Center for Economic Consultancy in Kuwait. The Kharafi group is major shareholder in Zain.

Commercial Bank climbed 2.2 percent and Boubyan Bank added 1.7 percent, helping Kuwait's banking index rise 1.3 percent to a 21-month high.

Banks have surged ahead of a $104 billion government development plan that is expected to be part funded through state-backed bank loans. "Banks have increased enough because they remain under pressure," said Nafisi.

He estimated provisions ate up 53 percent of combined bank profits in the first half of 2010, while around 50 percent of lenders' profits for the six months ending Dec. 31 would be wiped out by further provisions.

Kuwait's index rose 1 percent to its highest close since May 24 in its sixth straight gain.

Many Kuwait stocks have now moved beyond fundamentals, said a Kuwait trader who asked not to be identified, and are incorporating two to three years of future earnings.

"This is never a good idea bearing in mind the large retail component in Kuwait. If I was buying I would be confident I could get better prices than at present," the trader added.

Dubai's index fell 0.7 percent to 1,620 points, slipping from Monday's 16-week high, but further gains are forecast in the medium term. Emaar Properties and Arabtec each lost 2.1 percent. "The fact we haven't sold off shows there are still buyers into any weakness," added Wakeman.

Shares in Talaat Moustafa Group (TMG), Egypt's biggest listed property developer, tumbled after a court upheld a ruling that threatens its flagship real estate project.

TMG fell 7 percent to 6.9 pounds after the court affirmed an earlier verdict that a Housing Ministry body broke the law when it sold land for TMG's Madinaty development.

-- With input from agencies