Industries Qatar (IQ), the second-biggest petrochemicals maker in the Middle East, jumped 2.3 percent and Qatar Navigation, a freight transportation company, increased to the highest since September 2008. The QE Index jumped 1 percent to 8,273.07, the highest since October 2008, at the 12:30 p.m. close in Doha.

IQ is up 28 percent in the past three months, while the benchmark has gained 19 percent this year as Qatar's bullish macroeconomic outlook bolsters shares.

“Valuations are attractive and earnings have surprised on the upside and were well ahead of other regional markets — the country's economic growth is translating into solid corporate growth,” said Fahd Iqbal, EFG Hermes strategist.

“Our only concern is relatively low number of listed companies, while for foreign investors it's always a bit tight because of ownership restrictions.”

Qatar National Bank QNB) rose 0.4 percent and Commercial Bank of Qatar (CBQ) added 1.5 percent, with the latter lender among EFG-Hermes top 20 stocks for the Middle East and North Africa.

Kuwait's Wataniya, a unit of Qatar Telecom (Qtel), also hit a two-year high on Monday after its consortium bought the remaining half of Orascom Telecom's Tunisian unit in a $1.2 billion deal.

Wataniya, also known as National Mobile Telecommunications, climbed 2.1 percent, while Qtel edged up 0.05 percent after the deal was announced. Orascom Telecom fell 0.9 percent after being up as much as 5 percent intraday.

Saudi Arabia's Tadawul All-Share Index (TASI) ended almost flat at 6,363 points, with petrochemical gains canceled out by weak bank stocks.

Samba Financial Group dropped 2.9 percent and Banque Saudi Fransi lost 0.7 percent.

Sector activity for the day was mostly positive with 11 gainers sectors against four losing sectors. The gains ranged from 0.02 percent in the real estate development sector to 0.80 percent in the retail sector, whereas the losses were in energy & utilities (0.31 percent), the telecommunications and information technology (0.34 percent), the multi-investment (0.48 percent) and the banks and financial services (0.60 percent). The overall market breadth for the day was positive with 69 advancers against 47 decliners giving it an AD ratio of 1.46, the Financial Transaction House (FTH) said in its daily market commentary.

The liquidity for the day reached SR2.24 billion, it added.

Dubai's benchmark climbed 0.5 percent, bolstered by Emaar Properties' 1.4 percent rise, but volumes were again lackluster.

“Focus for dedicated MENA investors remains in Egypt, Qatar and Saudi Arabia,” said Julian Bruce, EFG-Hermes director of institutional equity sales.

“UAE remains overlooked due to absence of any positive catalyst. Investors are unwilling to commit fresh funds now we're approaching year end and there is still an air of caution whilst we await any further developments on Dubai Holding's debt restructuring.”

The restructuring of Dubai Holding is under way and will include a haircut for creditors and injections of fresh government funds, the vice chairman of Dubai's top fiscal body told the Financial Times last week.

— With input from agencies