By Ateeq Shariff
Most Gulf stock markets rose on Tuesday after Washington said it was still engaging with Tehran to try to end their war, even as the U.S. blocked shipping traffic to and from Iran's ports following the collapse of peace talks at the weekend.
Sources told Reuters that both sides had maintained an openness to dialogue, while a U.S. official said there had been progress towards an agreement.
Negotiating teams could return to Islamabad this week, four sources said on Tuesday.
Dubai's main share index DFM:DFMGI advanced 0.9%, underpinned by a 2.6% rise in blue-chip developer Emaar Properties DFM:EMAAR and a 3.3% increase in toll operator Salik DFM:SALIK.
In Abu Dhabi, the index ADX:FADGI gained 0.6%, with Aldar Properties ADX:ALDAR up 3.7%.
Gulf stocks were buoyed by hopes of a diplomatic breakthrough, although investors remained alert to the continued closure of the Strait of Hormuz, said Daniel Takieddine, co-founder and CEO of Sky Links Capital Group.
Oil prices eased slightly but stayed elevated as disruption to traffic through the key shipping lane persisted, Takieddine noted.
Saudi Arabia's benchmark index TADAWUL:TASI added 0.5%, supported by a 0.6% rise in Al Rajhi Bank TADAWUL:1120.
However, oil major Saudi Aramco TADAWUL:2222 fell 0.9%.
Brent crude futures ICEEUR:BRN1! were down $1.52, or 1.5%, to $98.25 a barrel at 1235 GMT.
Takieddine said investors were looking to upcoming earnings for signs of corporate resilience that could lend fresh support to the recovery.
The Qatari index QSE:GNRI was up 0.6%, buoyed by a 0.9% gain in the Gulf's biggest lender Qatar National Bank EGX:QNBE.
Outside the Gulf, Egypt's blue-chip index EGX:EGX30 - which traded after a two-session break - jumped 1.8%, with Commercial International Bank EGX:COMI gaining 3.5%.
Saudi Arabia
TADAWUL:TASI rose 0.5% to 11,486
Abu Dhabi
ADX:FADGI added 0.6% to 9840
Dubai
DFM:DFMGI gained 0.9% to 5,720
Qatar
QSE:GNRI was up 0.6% to 10,691
Egypt
EGX:EGX30 leapt 1.8% to 49,979
Bahrain
BAHRAIN:BHBX was flat at 1,910
Oman
(.MSx30) climbed 0.4% to 8,244
Kuwait
KSE:BOURSA inched up 0.1% to 9,307