Bank earnings helped Abu Dhabi's stock index rise on Thursday as the benchmark posted its largest monthly gain in over five years, while Dubai hit a fresh 37-month high.
Bank shares extended gains after Abu Dhabi Commercial Bank reported a 32-percent jump in fourth-quarter net profit and proposed a 25-percent cash dividend for 2012. ADCB shares rose 3.5 percent to their highest since late 2008.
On Tuesday, National Bank of Abu Dhabi had posted a 55-percent rise in fourth-quarter profit, beating analysts' forecasts. Its shares slipped 1.4 percent on Thursday, but they still rose 6.3 percent for January.
"These numbers are a big change for UAE banks - a turning point," said Ali Adou, portfolio manager at The National Investor.
"We saw them spend the last three years cleaning their balance sheets and focusing on asset quality. It seems the provisioning cycle has bottomed."
Abu Dhabi's index rose 1.1 percent on Thursday. The market gained 9.5 percent in January, its biggest monthly rise since October 2007.
Dubai bourse, which has been surging on the back of a budding recovery in the property market, builder Arabtec jumped 5.7 percent to a six-month high.
Blue chip Emaar Properties slipped 0.2 percent, trimming the month's gains to 29.9 percent. The developer has been the main driver for Dubai's rally in recent months.
Dubai's index rose 0.7 percent to 1,888 points, its highest finish since December 2009, extending its January gains to 16.3 percent.
Elsewhere in the Gulf, Qatar's bourse was flat on Thursday after rallying this month as investors bought shares during the dividend season at the start of the year; Qatari companies usually give high payouts compared to regional peers. The index rose 4.4 percent in January, its best month since March 2011.
In Egypt, the index added 0.6 percent, continuing to rebound after slumping to a four-week low on Tuesday. Trade was sluggish with some investors hesitant to increase risk against a chaotic political backdrop.
More than 50 people have been killed in the past seven days of protests by President Mohamed Mursi's opponents to mark the second anniversary of the uprising that toppled Hosni Mubarak.
However, the market has held up well during the violence; it is down only 4.7 percent from its early January peak and up 19.7 percent from its November low, suggesting many investors, particularly foreigners, continue to look beyond the turmoil to a more stable political environment down the road.
Arab and non-Arab foreign investors were net buyers on Thursday, while Egyptian investors were marginal net sellers, according to bourse data.
Shares in National Societe Generale Bank rose 0.7 percent, after the central bank approved Qatar National Bank's (QNB) offer to take over NSGB.
French bank Societe Generale agreed to sell its 77 percent stake in NSGB to QNB for $2 billion, and the Qatari bank will offer to buy the remaining stocks for the same price under Egyptian market rules.
* The index gained 0.6 percent to 5,606 points.
* The index gained 0.7 percent to 1,888 points.
* The index rose 1.1 percent to 2,882 points.
* The index eased 0.04 percent to 8,725 points.
* The index edged up 0.07 percent to 6,245 points.
The index eased 0.01 percent to 5,800 points.
* The index ticked up 0.02 percent to 1,085 points.