Most stock markets in the Gulf rose on Tuesday after oil prices firmed above $40 a barrel, while Egypt climbed as foreign investors accumulated shares.

While many regional fund managers believe Gulf stock markets could still be pressured this year by further squeezes in corporate earnings, as governments continue to tighten fiscal policy, for now investors are focusing on the idea that the worst is over for oil prices.

Riyadh's stock index added 0.7 per cent in heavy trade. Petrochemical heavyweight Saudi Basic Industries advanced 1.0 per cent and other oil-linked stocks also gained.

Food and agriculture shares were strong, with the largest dairy producer, Almarai, and National Agriculture Development rising 1.7 and 7.9 per cent respectively.

"While Saudi Arabia's growth is expected to face a slowdown in 2016, we believe that the food and drink sector will benefit from structural factors, including favourable demographics, higher employment of locals in the private sector and increasing levels of urbanisation," said a note by Riyadh-based Aljazira Capital.

Dubai's index ended up 0.2 per cent in volatile trade as speculators booked profits in some mid- and small-cap shares and chased after others.

Arabtec, which was up as much as 2.9 per cent in early trade, ended flat. The builder fell 6.6 per cent on Monday after the company said in a brief statement that rumours former chief executive Hasan Ismaik would be appointed to its board were false. Fellow construction firm Drake & Scull fell 0.8 per cent.

Union Properties closed up 0.8 per cent at 0.92 dirham, off a session high of 0.97 dirham. Deyaar Development ended flat after trading up.

Abu Dhabi's benchmark added 0.4 per cent in its eighth straight session of gains, with volumes concentrated in mid-sized companies favoured by local traders.

Islamic insurer Methaq Takaful Insurance soared 14.3 per cent, it daily limit, in unusually heavy trade and while Union National Bank jumped 11.7 per cent.

In Qatar, the index added 0.5 per cent for its fifth straight session of gains, cutting its 2016 losses to 0.6 per cent. Property developer Ezdan Holding gained 1.8 per cent after falling in early trade.

But Doha Bank sank 6.1 per cent after the bank's annual general meeting approved a 3 riyal per share dividend; the chairman told the meeting that the bank would revise its 2016-2018 strategic plan, particularly with regard to overseas offices and branches, but did not elaborate.

Egypt's index rose 1.3 per cent in its fourth straight day of gains as foreign investors were net buyers, bourse data showed, after being largely absent from the market in previous days.

The Egyptian pound strengthened on the black market on Tuesday, two days after the central bank injected $500 million into the banking system in an exceptional auction. Recently the currency has been depreciating rapidly on the black market.

Global Telecom and Commercial International Bank , shares favoured by international portfolio managers, were each up by more than 1.5 per cent on Tuesday.

But Orascom Telecom, the most heavily traded stock by far, fell 1.6 per cent after rising by the same per centage in early trade.-Reuters