Aldar, Abu Dhabi's largest developer by market value, rose 3.1 percent as investors hoped a government support package for the firm to be announced this week.
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.
The firm has 14 billion dirhams ($3.8 billion) of debt maturing in 2011, according to investment bank EFG-Hermes.
"Investors in Abu Dhabi are waiting for news about the government support for Aldar and something is expected very soon," said Mohamed Khaled, Prime Emirates relationship manager.
"This has pushed the stock up. There are rumors that Aldar may pay investors not through bonds but through some other way such as real estate sale."
The index gained 0.3 percent to 2,722 points, snapping a four-session losing streak.
Dubai-based developer Arabtec climbed 2.6 percent helping the index rise for a second session in a row. The bourse closed 0.1 percent higher at 1,641 points.
In Saudi Arabia, heavyweight Saudi Basic Industries Corp. (SABIC) reached its highest value in seven months, buoyed by rising oil prices. SABIC shares closed 0.47 percent higher at SR106.
Saudi investors are expecting an end-of-the-year rally with the index crossing the 6,500 points mark.
"We are finally above the 6,500 mark and are stabilizing above it," said Saleh Al-Onazi, vice president of principal investment at Swicorp in Riyadh.
"Petrochemical stocks are doing well as oil prices are still high. Cement and the telecom sector is also doing well and so I believe that we will see a rally toward the end of the year."
The Tadawul All-Share Index (TASI) gained 0.21 percent to 6,577.11 points, its highest close in over seven months. The sector activity for the day was mostly negative with 9 out of 15 sectors closing with losses ranging from 0.02 percent by the Industrial Investment sector to 0.99 percent by the Real Estate Development sector. On the other hand the gaining sectors ranged from 0.09 percent by the Cement sector to 0.61percent by the Petrochemical Industries sector; In addition, the Multi-Investment sector had no change. The overall market breadth for the day was positive with 63 advancers against 63 decliners giving it an AD ratio of 1.00, the Financial Transaction House (FTH) said in its daily market commentary.
The stock market turnover reached SR3.05 billion on Sunday.
Egypt's main index dipped, with property developer Talaat Moustafa Group reversing earlier gains to drop 0.3 percent.
On Saturday, an Egyptian court delayed a hearing on whether the government must auction state land that was sold directly to TMG for its flagship Madinaty project.
The Kuwaiti index slipped 0.08 percent to 6,848 points.
- with input from agencies
