Saudi Arabia's gross domestic product rose by 6.7% in the fourth quarter, while overall growth last year increased by 3.2%, official statistics showed, which were largely in line with earlier government estimates.

"Economic output for Saudi Arabia remains strong and in line with forecasts, which could help support the stock market overall," said Farah Mourad, senior market analyst of XTB MENA.

Saudi currently has "strong fundamentals" favouring the stock market's direction, he said.

Saudi Arabia's benchmark index (.TASI) rose 2%, with Etihad Etisalat (Mobily) (7020.SE) jumping 9.9% after United Arab Emirates telecoms group e& (ETISALAT.AD) made an offer to increase its stake in Mobily to 50% and one share.

Oil giant Saudi Aramco (2222.SE) lifted sentiment, rising 5.5%.

Outside the Gulf, Egypt's blue-chip index (.EGX30) ended 2.6% higher, with real estate companies Heliopolis (HELI.CA) and Medinet Nasr (MNHD.CA) advancing 9.2% and 6%, respectively.

On Tuesday, Egyptian President Abdel Fattah al-Sisi has asked the government to set a price for unsubsidized bread following recent bread price increases.

Mourad said this move to alleviate the effect of rising wheat prices could help stabilize Egypt's stock market.

Dubai's main index (.DFMGI) gained 2% aided by a 14% jump in Islamic Arab Insurance Co (SALAMA.DU).

In Abu Dhabi, the index (.FTFADGI) ended 1.2% higher, with e& putting on 1.9%.

The Qatari index (.QSI) rose 0.3%, boosted by heavyweights Qatar International Islamic Bank and Qatar Gas Transport (QGTS.QA).