According to Reuters, Most regional markets gained as fears over Egypt unrest.

Qatar Islamic Bank, Qatar International Islamic Bank and Masraf Al-Rayan all rose more than 9 percent. A fourth Islamic lender, Barwa Bank, is unlisted.

The central bank issued a circular over the weekend, saying "it has been decided to terminate the activities of the Islamic finance services" of conventional banks.

"We expect banks either to wind down, convert (mainly corporate) Islamic finance into conventional loans or to sell their Islamic finance loans to Islamic banks," Jaap Meijer, AlembicHC senior analyst, wrote in a note to clients.

The gains by the bank shares were justified, said Patrick Rahal, senior analyst at Doha's The First Investor, but could prompt profit-taking on Monday.

The Qatari index rose 1.5 percent to 8,891 points.

In Saudi Arabia, Samba Financial Group climbed 0.9 percent.

Sofia El Boury, Shuaa Capital assistant vice-president for research, told Reuters Saudi banks had the most potential regionally.

"The catalyst will be increased lending growth to corporate borrowers. There will be a number of drivers... with the biggest being large government infrastructure spending," said Boury.

"The contribution of local banks in terms of providing project financing will increase, it's just that 2010 was a year of risk aversion and insufficient credit demand.

"There's a will from the authorities to channel excess liquidity into lending. Banks' liquidity positions are comfortable and have the capacity to lend, but they need an extra push to make that happen," she said.

The Tadawul All-Share Index (TASI) index rose 0.82 percent to 6,584.85 points, its fourth straight gain. The sector activity for the day was all positive except 1 losing sector. The gaining sectors ranged from 0.14 percent by the Energy & Utilities sector to 2.17 percent by the Media and Publishing sector. On the other hand the losing sector for the day was the transport sector with 0.45 percent. The overall market breadth for the day was positive with 133 advancers against 8 decliners giving it an AD ratio of 16.6, the Financial Transaction House (FTH) — licensed by the Capital Maket Authority (CMA) — said in its daily market commentary.

The stock market turnover for the day reached SR3.21 billion.

"We're expecting a choppy few weeks and won't get massive moves in either direction unless there are major political developments in Egypt, which is the main driver," said a Riyadh-based trader who asked not to be identified.

Dubai Islamic Bank rose 3.6 percent to a three-month high, helping Dubai's index gain for a third session in four. The Dubai index rose 1.6 percent to 1,606 points.

"This is probably in line with the numbers coming out of the UAE banking sector - people are now expecting lower provisions, so the numbers should be good," said Haissam Arabi, chief executive and fund manager at Gulfmena Alternative Investments.

Last week, Fitch Ratings gave Dubai Islamic a stable outlook, while National Bank of Abu Dhabi's quarterly profit rose 71 percent. The latter fell 0.4 percent.

The Abu Dhabi index climbed 1.1 percent to 2,674 points.

The Kuwaiti index fell 0.4 percent to 6,747 points.

The Omani index rose 0.4 percent to 6,886 points.

The Bahraini index climbed 0.6 percent to 1,451 points.