Stock markets in Saudi Arabia and the UAE soared on Thursday after the price of oil rebounded and the Riyadh government eased investors' fears by saying it would continue spending heavily on economic development.

Saudi Arabia's bourse rose 5.8 per cent shortly after its opening. All traded stocks posted gains and some, such as Advanced Petrochemical Company, were up 10 per cent, the bourse's daily limit for price moves.

The main fear of Gulf investors as bourses have tumbled in recent weeks has been that cheap oil would cause governments to cut back spending.

But Saudi Arabian Finance Minister Ibrahim Alassaf said on Wednesday that his government would continue spending strongly on development projects and social benefits in its 2015 budget, expected to be announced on Monday.

UAE, Kuwaiti and Qatari officials have made similar statements in recent days.

Meanwhile, the price of Brent crude for February delivery settled up two per cent at $61.18 a barrel on Wednesday as weeks of nearly non-stop selling abruptly halted. Oil was relatively steady on Thursday.

"It's a combination of stronger oil and US equity markets as well as news from Saudi Arabia yesterday," said Sebastien Henin, head of asset management at The National Investor in Abu Dhabi, said of Gulf markets' rally.

"Local equity markets had been hurt unnecessarily in the few previous sessions."

Kuwait's bourse added 1.4 per cent on Thursday morning and Oman jumped 3.8 per cent by midday. Qatar's bourse was closed for a national holiday.

Dubai's equities benchmark surged 11.5 per cent as all traded stocks rose; some were close to their daily 15 per cent limits. Heavyweight developer Emaar Properties rocketed 13.9 per cent and dominated trading volume.

Shares in construction firm Drake and Scull surged 13.6 per cent after it said its board would consider buying back up to 10 per cent of the company's shares at a meeting on December 22.

The announcement, and buy-back activity by Abu Dhabi's Waha Capital and Abu Dhabi Commercial Bank on Wednesday under existing programmes, were signs that UAE companies think their share prices are now too cheap.

Abu Dhabi's index surged 6.6 per cent in a broad rally. Aldar Properties, the emirate's largest listed developer, hit the 15 percent limit up.

In the broader Middle East region, Egypt's index jumped 3.1 per cent after suffering heavy losses in the previous days as global investors pulled out of emerging markets.-Reuters