Aldar’s shares rose 5.1 percent to their highest finish since Nov. 16. The developer, bailed out twice by Abu Dhabi with rescue packages of about $10 billion, swung back into profit in 2011 on the back of land sales to the government and increased home sales. 

It posted a net profit of AED642.5 million ($170 million) and proposed a AED0.05 dividend.

“There is a question on whether they should or can give out dividends, but any dividend helps the market,” said Amer Khan at Shuaa Asset Management.

Rival Sorouh Real Estate added 7.5 percent. The index rose 1 percent, extending 2012 gains to 3.6 percent.

Dubai’s Emaar Properties climbed 1.4 percent to a fresh six-month high ahead of posting estimate-beating earnings.

It reported a quarterly earnings of AED716 million, compared to an average analyst estimate of AED475 million.

Dubai’s benchmark extended a rally, gaining 1.2 percent to close at its highest level since August.

Analysts said the market is due for profit-taking after a sharp rise in recent sessions, but Emaar’s results could support them at these levels for a while longer.

“What’s keeping the market up is the surprise (upside to) results. You would tend to see short-term traders pick up positions in anticipation of quick gains,” said Khan.

Small-caps Union Properties, Gulf Navigation and Deyaar Development were up 7.3, 6.7 and 7.3 percent respectively. 

“Dubai is approaching 1,560 points and if it breaks above this it will signal a reversal of the down-trend in Dubai,” said Musa Haddad at National Bank of Abu Dhabi. “We expect the rally will continue and any downside will be an opportunity to buy.” 

In Kuwait, the index climbed 1.1 percent to 6,010 points, breaking the psychological level of 6,000 and closing at its highest level since Sept. 15. Trading volumes jumped to a two-year high, led by short-term traders betting on gains by small-cap stocks.

Gulf Finance House gained 7.9 percent and Al Ahlia Holding rose 8.3 percent. 

“Historically, trading and speculation on small-cap companies start in the first quarter,” said Talal Al-Hunaif, at Coast Investment and Development Co.

“Companies start afresh in the beginning of the year to boost their stock portfolios.”

Telecoms operator Zain fell 2.3 percent, despite posting a net profit of $1.03 billion in 2011, up from $1.02 billion in the previous year.

Elsewhere, banks dragged down Saudi Arabia’s benchmark by 0.2 percent, which ended lower after reaching a 21-month high in early trade.

Banque Saudi Fransi declined 1.4 percent, heavyweight Al Rajhi Bank dipped 0.3 percent and Alinma Bank shed 1.4 percent.

“Banks have been trading on headlines in the US and Europe and there have been repeated calls that interest rates will remain low, which tend to pressure earnings,” said Asim Bukhtiar at Riyad Capital.

“Investors are gauging headlines versus fundamentals. I would be surprised to see the loan growth from 2011 continue.”