Saudi Arabia's large-caps recovered in late trade and insurance stocks spiked, helping the index make small gains as investors shrugged off Iran's threat to halt oil shipments through the Strait of Hormuz.
Al Rajhi Bank ticked up 0.7 percent and heavyweight Saudi Basic Industries Corp (SABIC) climbed 0.8 percent.
The benchmark ended 0.3 percent higher at 6,418 points, trimming year-to-date losses to 3.1 percent.
Most of the turnover was in petrochemical stocks with analysts expecting a boost in 2011 earnings.
"There is room for upside in petrochemical stocks," said Hesham Abo-Jamee, chief executive officer at Bakheet Investment Group. "Their value will increase after geopolitical issues [in the region] are solved."
Abo-Jamee said he expects an estimated 20 percent increase in the annual profit of petrochemical companies' profit.
Iran's first vice-president warned on Tuesday that the flow of crude will be stopped from the crucial Strait of Hormuz in the Gulf if foreign sanctions are imposed on its oil exports.
Oil industry sources said late Tuesday that top oil exporter Saudi Arabia and other Gulf OPEC states are ready to replace Iranian oil if further sanctions halt Iranian crude exports to Europe.
Wataniya Insurance and Ace Arabia Cooperative Insurance surged 10 percent each. Al Rajhi Takaful jumped 9 percent.
Dubai's index made its largest one-day gain in two months and Abu Dhabi also ended higher but activity was muted in holiday-season trade.
Dubai's benchmark climbed 2 percent to 1,347 points, up from Tuesday's seven-year low.
Emaar Properties was the main support, rising 2.8 percent and heavyweight Emirates NBD gained 3.7 percent. Illiquid stock Mashreq bank jumps 7.4 percent, in year-end sporadic trade.
"There wasn't a major reason for the shares to drop and it wasn't due to companies' performances but investor sentiment," said Marie Salem, equity trader at Al Mal Capital.
"Investors might be taking the chance to improve closing prices without really increasing the cost, which means higher commissions and fees."
Abu Dhabi's Aldar Properties advanced 3.7 percent, lifting from Tuesday's record low and accounting for nearly a quarter of the market's trades.
The board will meet to discuss asset sales, which analysts say could be land sales, as the developer struggled with financials amid a property downturn.
"People are starting to consider that the sale of assets isn't such a negative thing since it might be the action which stabilises things for the company," Salem added.
Abu Dhabi's benchmark ended 0.6 percent higher at 2,366 points, moving sideways since slumping to a 33-month low last week.
Elsewhere, Oman's market ended 0.3 percent higher at 5,679 points, while Kuwait and Qatar's bourses ended little changed.
Shares in Doha-listed United Development Company were temporarily suspended to give investors "sufficient opportunities" to view an earlier company disclosure.
"United Development Company (UDC) has been approached to enter into serious negotiation in order to add a strategic Qatari shareholder through issuance of new shares, the number and price of which will be announced later," the company said in a bourse statement earlier this month.