JEDDAH: Saudi Arabia's bourse rose to a five-year high in a new trend which signals the return of investor confidence in blue chips.

After most Saudi banks and petrochemical firms posted third-quarter earnings that beat analysts' forecasts, investors are pricing in a continued trend for the next quarter's results.

"The market will be looking for Q4 earnings as an indicator for where to go from here," said John Sfakianakis, chief investment strategist at Saudi investment firm MASIC.

"If we do see an upward move before that, it could be an exaggeration."

Sfakianakis said the market was fairly valued at this point and was likely to trade sideways for the next two weeks or until there are fresh catalysts.

The index climbed 0.9 percent to 8,263 points, its highest level since September 2008.

It will have to post two consecutive gains above the previous peak of 8,223 points — hit in August this year — to confirm a breakout.

Banking shares index rose 1.1 percent and petrochemical index climbed 0.6 percent. Together, the two sectors make up 65 percent of the market's total value.

Al-Rajhi Bank and Saudi Basic Industries Corp (SABIC) added 1.7 and 0.7 percent respectively.

Saudi Telecom Co surged 6.4 percent to a four-and-half-year high. The firm last month posted a surge in earnings and beat forecasts.

In Egypt, the benchmark index rose 0.7 percent to a new 33-month high.

In Kuwait, the measure gained 0.3 percent to 7,940 points, hovering below the psychologically important 8,000 level with investors hesitant as most companies are yet to post quarterly earnings.

UAE bourses were mixed. Dubai's benchmark retreated 0.1 percent but is still up 78.7 percent year-to-date.

The market hit a five-year high last week and the next expected catalyst is the announcement in late November of whether Dubai's bid to host the World Expo 2020 is successful.