The rally could have found support from the nearing release of corporate earnings and the high oil prices that indicate larger surplus petrodollars for the Arab Gulf states, they added.

"I believe the impact of the euro zone ordeal is starting to shift to the back seat as investors start to focus attention on the annual profits of listed firms,” Nizar Taher, chief of brokerage at the Jordan Ahli Bank, told Arab News.

"I think the decision by the European summit to adopt stricter budget rules could have a positive impact on global markets, including Arab bourses, but ambiguity will continue to prevail as investors want to see the response on the ground by financial markets,” he said.

Taher believed that regional politics, including the Arab Spring uprisings and the standoff over the Iranian nuclear file, will continue to reflect negatively on regional markets, particularly foreign investors.

Saudi stocks extended gains last week, buoyed by the petrochemical and banking sectors.

The Tadawul All-Share Index (TASI) climbed 2.4 percent on weekly basis, closing at 6,251.92 points.

Saudi analysts expected the stock market to score further gains toward the end of the year as investors await the government to unveil its 2012 budget, which usually provides for lavish spending.

”The Saudi budget is a key supporter of the stock exchange,” said Zayed Al-Hossan, professor of economic and financial sciences at King Saud University.

He expected the projections of the public budget to trigger a flight of liquidity from the real estate sector to the stock market. "At least 70 percent of the liquidity in the stock market is involved in speculative trading,” he said.

Al-Hossan believed banks, which still suffer from the global financial sector, would be the main beneficiary from the public budget.

"If TASI did not crash the 7,000-point level by the end of February, then Saudi stocks will continue to trade in this area for months to come,” he said.

Kuwaiti stocks scored fresh gains last week as investors appeared upbeat over the latest political developments in the country, including the formation of a new government and the ruler’s dissolution of the parliament.

Kuwait’s KSE all-share index gained 0.5 percent on weekly basis, closing at 5,867 points, led by the banking sector.

"I believe the Kuwaiti market stands to move higher, given the state of optimism that currently prevail on the stock exchange as a result of the political changes,” Kuwaiti analyst Saleh Al-Salmi said.

The benchmark of the United Arab Emirates stock exchange of Dubai gained 0.4 percent last week, while the Abu Dhabi index inched lower, closing at 2,442 points compared with the earlier week’s close at 2,445 points.

Qatar’s index rose 1.7 percent, closing week at 8,808 points, while Bahrain’s benchmark closed unchanged at 1,158 points.

Jordanian stocks scored modest gains though investors continue to harbor fears of the negative fallout of the Syrian situation on the Jordanian economy, Taher said.

The all-share index of the Amman Stock Exchange (ASE), closed week at 1,981 points, marginally up from the earlier week’s close at 1978 points.

Egypt’s AGX 30 index, which measures the performance of the market’s 30 most active stocks, plunged 2.6 percent on weekly basis, to close at 3,983 points.

The decline was attributed by analysts mainly to a sell-off by Arab and foreign investors who were apparently concerned over Islamists’ sweeping victory in the first stage of general elections.