-Dubai's volume shrinks before public holiday

-Egypt's CIB surges on hopes for sale of investment bank

DUBAI: An 8 percent leap in oil prices due to hopes for OPEC output cuts boosted Gulf stock markets on Wednesday with Saudi Arabia climbing to its highest level this year, while foreign buying lifted Egypt's bourse again.

The Saudi index climbed 1.5 percent to 7,000 points in heavy trade, confirming a break of major technical resistance on its April peak of 6,876 points. That triggers a double bottom formed by this year's lows and pointing up to around 8,400 points in the long term.

The index has soared over 25 percent from October's multi-year low since a $17.5 billion international bond issue by the government eased fears about its ability to cope with an era of cheap oil, and helped it begin making delayed payments to settle its debts to private companies.

The market's sharp rebound means many stocks are no longer valued cheaply, and a monthly Reuters poll of leading Middle East fund managers, published on Wednesday, showed them becoming more cautious towards Saudi equities for that reason.

Twenty-nine percent said they expected to increase allocations to the Saudi stock market in the next three months and 21 percent to reduce them, compared to ratios of 36 percent and 14 percent last month.

Many analysts believe that even if OPEC reaches an output deal with non-OPEC oil producers, oil prices may not recover much further - and financial pressures on Gulf oil exporting nations will remain heavy. But the prospect of a deal triggered broad buying of Saudi stocks on Wednesday. The petrochemical sector led the market up, with blue chip Saudi Basic Industries jumping 4.4 percent.

Saudi Arabian Mining Co (Ma'aden) rose 1.8 percent after announcing a 24 billion riyal ($6.4 billion) project to boost its phosphate capacity. The banking sector underperformed, rising only 0.7 percent.

Other Gulf markets traded sideways early on but rose in late trade as oil prices began to surge. Dubai's index rose 0.8 percent, athough trading volume was low ahead of the start of a long holiday weekend on Thursday.

Eight of the 10 most heavily traded Dubai stocks fell but blue chip Emaar Properties surged 2.1 percent.

Abu Dhabi's index rose 1.1 percent but that was largely on the back of a 6.0 percent gain by telecommunications firm Etisalat; most of the active stocks were flat or lower.

In Qatar, the index added 1.6 percent as Qatar National Bank surged 3.8 percent.

Egypt's index climbed 2.6 percent in heavy trade, with Commercial International Bank, the largest lender, adding 4.0 percent after a source told Reuters that it aimed to sell 70 percent of its investment banking arm CI Capital to local investors in a deal likely to be finalised "within hours".

Among other major gainers, GB Auto surged 7.5 percent.

Exchange data showed foreign investors were net buyers of Egyptian stocks by a relatively large margin of about $10 million. They have been net buyers every day since the float of the Egyptian pound on Nov. 3.-Reuters