Other Middle East markets also rose, tracking gains on global bourses.

Dubai's Arabtec rose 1.6 percent to 1.93 dirhams after a broker gave the builder a buy rating and a target price of 2.4 dirhams. Union Properties climbed 1.5 percent.

Property stocks are typically the most volatile on markets in the United Arab Emirates and so tend to overshoot on the way up and down, attracting speculators. 

"Real estate stocks are doing well because of the (share) price factor," said Vyas Jayabhanu, head of investments, Al-Dhafra Financial Broker. "They have dropped quite a lot and so you have a rally. However, it's improbable that it will sustain. Dubai needs an inflow of funds."

The Dubai index rose 0.6 percent to 1,701 points - its highest close since May 18, taking its September gains to 14.7 percent as traders bet a post-Ramadan rally, often a feature of regional markets, can be sustained. Yet the benchmark is down 5.7 percent in 2010 and 73 percent below a 2008 peak as the emirate's property crash and its estimated $110 billion of debts weighed on stocks.

"Dubai's real estate sector will take a long time to solve its structural issues and rebalance the supply-demand equation," said Shahid Hameed, Global Investment House head of asset management for the Gulf region.  

"The UAE, and Dubai in particular, was a real estate play, either directly or indirectly, and the economy has to find a new growth engine, which I don't see happening at present. Hence, I wouldn't think equities can make a sustained rally - current gains are more of a dead cat bounce." 

The Abu Dhabi index rose 0.2 percent to 2,638 points.

Saudi Arabia's petrochemical index hit a three-month high. Product prices are up 5 to 8 percent this month as unscheduled plant shutdowns squeezed supply, said Ankit Gupta, senior research analyst at Securities & Investment Company (SICO) in Bahrain. 

"Although demand hasn't picked up significantly, lower than expected supplies...support global prices," said Gupta. "So, (it's) good for producers who are operating at the expense of producers who faced such shutdowns." 

Gupta is cautious about the sector's prospects.

"We remain neutral due to lack of near-term catalysts, limited incremental cost pressures and the expected new supplies during the fourth quarter," added Gupta. "We favor Tasnee, SAFCO and Advanced Petrochemicals in the short-term."

Tasnee, also known as National Industrialization Co., fell 0.3 percent, easing from Monday's 20-week high. SAFCO (Saudi Arabian Fertilizers Co.), fell by the same margin to end slightly below this week's six-month peak, while Advanced Petrochemical Co. rose 0.8 percent. 

The Tadawul All-Share Index (TAS) rose 0.25 percent to 6,434.9 points. The sector activity for the day was mostly positively biased with 12 out of 15 sectors closing with gains ranging from 0.01 percent by the Insurance sector to 1.50 percent by the Media and Publishing sector. On the other hand losing sectors were Real Estate Development, Multi-Investment and Industrial Investment with losses of 0.21 percent, 0.32 percent and 0.35 percent respectively. The overall market breadth for the day was strongly positive with 70 advancers against 51 decliners giving it an AD ratio of 1.3720.33, the Financial Transaction House (FTH) said in its daily market commentary.

Commercial Bank of Qatar rose 1.3 percent, helping Doha's index reach a 21-week high.

"Qatar is outperforming, led by banks, which have very good valuations," said Rami Sidani, Schroders Middle East head of investment. "Some Q3 results are expected soon from the banking and petrochemical sectors which will impact the market."

The Qatari index rose 0.5 percent to 7,638 points.

In Egypt, Talaat Moustafa, rose 2.5 percent, but pared early gains after Egypt's Cabinet delayed a meeting that was expected to resolve a land dispute involving the firm. The country's index hit a four-month high 6,673 points.

The Kuwaiti index ended flat at 6,821 points.

The Omani index slipped 0.02 percent to 6,419 points.
 
- With input from agencies