Saudi Arabia's stock index hit a new 17-month high as investors continued buying ahead of possible greater foreign involvement on the bourse. The index rose 0.2 per cent to 6,599 points to its highest level since mid-October 2008.

Samba Financial Group climbed 0.8 percent and Saudi Electricity Co added 1.6 per cent.    

The index is up 1.9 percent since March 6, when the head of its capital markets authority told newspapers that Saudi Arabia wanted to increase foreign activity and has considered exchange-traded funds (ETFS).

"The rally seems to have further room to go and traders should hold on to their positions while dynamically increasing their protective stops," Shuaa Capital wrote in a research note.

Meanwhile, Dubai's index hit a two-month high as foreign players covered short positions ahead of any Dubai World announcement and speculators moved in after bluechip stocks broke resistance levels.

Dubai Financial Market surged 6 per cent, taking its gains to 25 per cent since March 4, while Emaar Properties added 3.2 percent and Arabtec 4 percent.   

Dubai World is expected to make an announcement on its multi-billion dollar debt restructuring this month. "Everybody is waiting for Dubai World news and some people are more optimistic than others and have decided to buy now," says Samer Al-Jaouni, general manager of Middle East Financial Brokerage Co.

"The market is based mainly on technical factors - most of the bluechips have broken very important resistance levels, creating appetite among speculators to get in do a lot of trading within the same session."    

The index climbed 2 percent to 1,717 points, hitting its highest level since Jan. 14 intraday high.  "From their trading behaviour, it looks like foreign investors are aggressively buying to cover short positions before any news on Dubai World comes out," added Jaouni. - Reuters