Most stock markets in the Gulf ended higher on Tuesday, tracking a rise in global shares as traders held onto hope that interest rates will soon peak and fall later this year.
The Saudi bourse, however, extended losses on profit taking.
Dubai's main share index (.DFMGI) advanced 1%, buoyed by a 1.1% rise in top lender Emirates NBD (ENBD.DU) and a 1.2% increase in Dubai Electricity and Water Authority (DEWAA.DU) following shareholder approval to distribute a one-time special dividend of 3.34 fils per share.
The publication of improving business conditions figures in Dubai boosted the stock market. The local economy continued to progress month over month, providing suitable conditions for local stocks to thrive, said Farah Mourad, senior market analyst at XTB MENA.
"As a result, the main index could test this year's peak and could record new highs."
In Abu Dhabi, the index (.FTFADGI) added 0.1%. The Qatari index (.QSI) was up 0.4%, with Qatar Islamic Bank (QISB.QA) rising 1%.
Oil prices - a key catalyst for the Gulf's financial markets - steadied as Chinese inflation data pointed to persistently weak demand, but a softer dollar and hopes that the Federal Reserve might ease up on its policy tightening after a key U.S. inflation report this week provided support.
Saudi Arabia's benchmark index (.TASI) dropped 0.5%, weighed down by a 0.8% decrease in Retal Urban Development Co (4322.SE) and a 1.2% decline in Al Rajhi Bank (1120.SE).
According to Mourad, traders in the Saudi market fueled some price corrections after the main index surpassed its previous peak.
"However, the main index could return to the upside thanks to strong local fundamentals and a more positive sentiment among local investors."
Outside the Gulf, Egypt's blue-chip index (.EGX30) advanced 1.4%, as most of the stocks on the index were in positive territory including tobacco monopoly Eastern Company (EAST.CA), which was up 6.2%.
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