DUBAI, July 17 (Reuters) - Dubai-listed budget carrier Air Arabia surged to a near five-year high on Wednesday, leading a rally on the emirate's bourse ahead of UAE second-quarter earnings.
Air Arabia jumped 8.3 percent to reach its highest level since October 2008 and was also the biggest gainer and top trader on the market.
"Air Arabia has been our favourite pick since the beginning of the year because it's a defensive stock that also has a high growth story," said Marwan Shurrab, fund manager and head of trading at Vision Investments.
"Not only institutions are piling in but retail (investors) are also aggressively buying - it has the best dividend yield in the market," he added.
Air Arabia has a 12-month forecast of a 6.4 percent yield, which compares with 4.7 percent for a selection of regional stocks, according to Reuters data.
The company has already paid its annual dividend for 2012, which may indicate many recent buyers are long-term investors.
Goldman Sachs last week gave the stock a 'buy' rating.
Dubai's index rose 2 percent to 2,495 points, resuming a rally but failing to break the 2,501-level chart resistance - the four-and-half-year intraday peak hit on June 3.
Abu Dhabi's benchmark climbed 0.3 percent to hit a new 57-month high, its ninth consecutive gain.
In Saudi Arabia, petrochemical shares fell for a third session.
Saudi Basic Industries Corp (SABIC), the Gulf's largest listed company, slipped 0.5 percent.
Three of SABIC's units - Saudi Kayan, Saudi Arabian Fertilizer Co (Safco) and Yanbu National Petrochemical Co (Yansab) - have reported below-forecast earnings that trailed estimates.
National Petrochemical fell 3.7 percent after the firm reported a quarterly net profit of 10.8 million riyals ($2.88 million). NCB Capital had forecast National Petrochemical would make a quarterly profit of 238 million riyals.
"The significant earnings miss was primarily driven by lower-than-estimated plants' operating rates during the quarter," Ankit Gupta, assistance vice-president of research at NBK Capital said in a note.
Gupta did however highlight that these results showed National Petrochemical had become profitable in its third quarter of operations.
This is in contrast to Saudi Kayan which has yet to make a quarterly profit nearly two years after starting production.
The kingdom's benchmark eased 0.05 percent, its second loss in three days since hitting a 15-month high.
In Qatar, the index climbed 0.4 percent to a five-week peak.
Qatar National Bank rose 1.8 percent to new all-time high. The lender last week posted a 24 percent increase in second-quarter profit, beating estimates.
QNB is among Doha bluechips expected to draw in additional foreign buyers after index compiler MSCI upgraded Qatar to emerging market status.
Elsewhere, Egypt's main benchmark slipped 0.3 percent to ease from Tuesday's six-week high.
Foreigners were net sellers against Egyptian buyers, bourse data showed. Civil unrest overshadowed upbeat investor sentiment on the formation of an interim cabinet.
Thousands of supporters of deposed Egyptian President Mohamed Mursi demonstrated outside the prime minister's office on Wednesday in a "day of steadfastness".
* The index rose 2 percent to 2,495 points.
* The index climbed 0.3 percent to 3,800 points.
* The index slipped 0.05 percent to 7,699 points.
* The index gained 0.4 percent to 9,474 points.
* The index slipped 0.3 percent to 5,345 points.
* The index rose 0.5 percent to 7,922 points.
* The index advanced 0.1 percent to 6,583 points.
* The index rose 0.1 percent to 1,189 points.