Aldar, which faces a funding gap of 6.1 billion dirhams ($1.66 billion) to the end of 2011, according to investment bank EFG-Hermes, rose 7 percent to its highest finish since Nov. 1.

The stock is down 49 percent year-to-date, tumbling as the company made losses for four straight quarters and investors feared government support would be dilutive to minority shareholders. Speculators are now betting state help will be more favorable, traders said.

"A direct government loan to Aldar would make sense, whether it is on commercial or slightly softer terms," said Chet Riley, Nomura property analyst.

"Aldar would be able to draw down on this as other debt owed to local banks matures. This would help Aldar and also stimulate credit growth, because these banks would then be able to redistribute this money by lending to other companies."

The developer has 14 billion dirhams of debt maturing next year, according to EFG-Hermes, while last month Bank of America Merrill Lynch said Aldar needed $2.7 billion by 2011.

In November, Aldar said it was in the final stages of talks with the government over its cash needs, with a deal expected by the end of 2010.

"There's a lot of speculation that Aldar's funding requirements will soon be clarified - we're nearing the end of the fourth quarter and people are speculating something is close," said Matthew Wakeman, EFG-Hermes managing director for cash and equity-linked trading.

The Abu Dhabi index rose 0.5 percent to 2,755 points.

The Dubai index fell 0.9 percent to 1,700 points.

Qatar volumes surged to an 18-month peak as the country's index extended a World Cup rally into a fourth day. The Qatari index climbed 1.8 percent to 8,779 points. The benchmark hit a new 28-month high and is up 7.3 percent since the country was chosen to host the 2022 soccer tournament.

Masraf Al-Rayan and Al-Khalij Holding led gains, rising 9.2 percent and 9.5 percent respectively.

Kuwait's Zain rose 1.4 percent to a two-week high after a local court delayed hearing a lawsuit from a shareholder unhappy with a proposed $12 billion stake sale to Abu Dhabi's Etisalat. The latter ended flat. The Kuwaiti index slipped 0.1 percent to 6,860 points.

In Saudi Arabia, the Tadawul All-Share Index (TASI) rose 0.3 percent to 6,457 points. The sector activity for the day was mostly positive with 10 out of 15 closing with gains ranging from 0.08 percent by the Building & Construction sector to 5.80 percent by the Cement sector. On the other hand the losing sectors ranged from 0.29 percent by the Energy & Utilities sector to 1.08 percent by the Hotel & Tourism sector. The overall market breadth for the day was positive with 60 advancers against 59 decliners giving it an AD ratio of 1.01, the Financial Transaction House (FTH) said in its daily market commentary.

The Saudi stock market turnover reached SR3.40 billion on Wednesday.
 
— With input from agencies