DUBAI May 5 (Reuters) - Most Gulf markets rose on Sunday as upbeat sentiment in local fundamentals encouraged renewed buying, while Saudi Arabia's bourse slipped from a three-week high as investors book gains.
UAE bourses rallied, with Dubai's measure up 1.9 percent to end at a fresh 41-month high. The number of shares changing hands - at 547.9 million - is the highest one-day volume on the index in 14 months.
Air Arabia and Dubai Investments jumped 5.8 and 5.7 percent respectively.
Sentiment has improved in the emirate as Dubai successfully restructured some of its maturing debts and repaid others, and the two main sectors present on the exchange - real estate and banks - have somewhat recovered from the 2008 financial crisis.
Dubai's government said on Sunday it had fully repaid 3.34 billion dirhams ($909 million) of bonds which were due on April 23.
"Despite the rally, valuations in the UAE are still attractive," said Rami Sidani, head of investment at Schroders Middle East. "Yields are compelling with as much as 5-6 percent in the main Abu Dhabi banks. This will keep driving interest."
Abu Dhabi's index advanced 0.8 percent, extending year-to-date gains to 25.7 percent.
Energy firm Dana Gas was the main support, rising 7.7 percent on market talk it may spin off operations in Kurdistan into a new listed company. The company denied the speculation.
National Bank of Abu Dhabi shed 2 percent but the stock is still up 28.2 percent in 2013.
JP Morgan cut its rating on NBAD to 'neutral' in a May 3 note, saying the share price is trading at a premium level of 10.9-times estimated 2013 earnings.
"In the current low yield environment with limited domestic lending growth opportunities, we believe that the best way ahead for banks like NBAD - with higher than required Tier 1 in our view - to enhance underlying return on equities is by optimising (the) capital structure," it said, pointing towards higher dividends, share buybacks and acquisitions as ways to do this.
The U.S. investment bank upgraded Abu Dhabi Commercial Bank to overweight and retained its overweight rating on First Gulf Bank, it said in the same note.
Qatar's bourse gained 0.4 percent to a fresh 11-week high, and Oman's index rose 0.5 percent.
Kuwait's benchmark climbed 1.6 percent, extending its 2013 advance to 30 percent.
In Saudi Arabia, the kingdom's benchmark slipped 0.1 percent, trimming year-to-date gains to 5.9 percent.
Petrochemical shares declined, with the sector's index losing 0.3 percent. Saudi Basic Industries Corp (SABIC), the world's largest chemicals company, dipped 0.5 percent.
"Fund managers and analysts are assessing the first-quarter earnings and I don't think anyone has taken a strong direction yet," said Abdullah Alawi, assistant general manager and head of research at Aljazira Capital.
The market is at the mercy of retail speculative trading, he added. Such a trend usually means focus is on small and mid-cap stocks, which can be moved easier for a quick profit.
National Agriculture Marketing Co, one of the smallest stocks on the index by market capitalisation, dipped 3.3 percent. The number of shares changing hands on Sunday was the highest in a single session for the firm in over two years.
Egypt's exchange was closed on Sunday due to a public holiday.
* The index rose 1.9 percent to 2,169 points.
* The index gained 0.8 percent to 3,307 points.
* The benchmark climbed 0.4 percent to 8,786 points.
* The index gained 0.5 percent to 6,176 points.
* The measure climbed 1.6 percent to 7,715 points.
* The index slipped 0.1 percent to 7,206 points.
* The measure advanced 0.6 percent to 1,108 points.