OT's shares rose 6.7 percent to their highest close since Aug. 4, after an Egyptian newspaper reported that a law firm charged with assessing the value of the company's Algerian unit, Djezzy, had said it was worth $7 billion.
Mobinil, in which Orascom Telecom is a main shareholder, soared 10 percent. The main index rose 1.2 percent. "The news is still to be confirmed but the market is desperate for good news," said Amr el-Feky of Cairo Capital Securities. "It's a short-term rebound."
OT's CEO said the firm had not received any official information and would not comment on newspaper reports or rumors.
"It is highly unlikely that the Algerian government would actually pay this ($7 billion)," Naeem Holding said in a note.
Ezz Steel added 4.7 percent, rebounding from Monday's two-and-a-half year low after a court jailed its former chairman and ordered the withdrawal of two of its licenses.
The Egyptian index gained 1.2 percent to 4,464 points.
In Saudi Arabia, the Tadawul All-Share Index (TASI) rose for a fourth day in six, up 0.42 percent to 6,144.27, tracking gains in world stocks, which shrugged off Standard & Poor's downgrading of Italian debt.
Insurance stocks, usual targets for small investors seeking short-term gains, dominated volumes. The sector rose 0.5 percent while petrochemical stocks also gained.
Oil prices supported with Brent recovering from heavy losses as worries over the global economy were seen to have been factored into current prices.
"Oil is still very resilient, which is very positive. GCC (Gulf Arab) countries are comfortable at these levels even if they had to increase their spending," said Sebastien Henin, portfolio manager at The National Investor.
In Qatar, the index rose 0.5 percent to 8,445 points to hit a seven-week high as gainers outnumbered losers 15 to four.
Industries Qatar climbed 1 percent and lender Masraf Al-Rayan added 1.6 percent.
Retail-investor driven stocks lifted Dubai's index by 0.2 percent to 1,466 points, trimming 2011 losses to 10.1 percent.
Emaar Properties climbed 0.4 percent, and Arabtec rose 0.7 percent — together accounting for nearly half of all shares traded.
"Medium-term and long-term investors can only enter the market when the index prints a firm close above 1,490 point and 1,570 points respectively," said Global Investment House in a research note.
Low risk appetite means local and foreign funds are largely on the sidelines.
"Unless we see something significant from Europe, or change in terms of macro indicators, it will be more of the same: Sideways trading, with low liquidity and volatility," Henin added, referring to Gulf markets.
Abu Dhabi's index declined for a 10th day straight as banks weighed, ending 0.3 percent lower at 2,557 points.
Elsewhere, Oman and Kuwait's bourses ended near-flat.
The Bahraini index eased 0.06 percent to 1,257 points.
