UAE. Gulf shares rose as a US plan to revive growth in the world’s largest economy boosted the price of crude oil, improving economic prospects for the region.

Abu Dhabi Commercial Bank, the UAE’ third-biggest bank by assets, and Commercial Bank of Dubai, the lender 20%-owned by the Dubai government, surged after banks said they will convert federal government deposits into capital to cushion losses.

Arabtec Holding, Dubai’s biggest construction company, led gains among real-estate firms.

The Dubai Financial Market General Index climbed 1.64%, the most in two weeks, to 1,532.76. Most sectors were up with Investment & Financial Services up 2.84%, Banks 1.77%, Real Estate and Construction 1.91%. The Telecommunications secor closed 3.39% down.

Abu Dhabi’s ADX General Index added 1.2%, taking the two-day rise to 3.6%.

The Kuwait Stock Exchange Index increased 0.9%, while the Oman measure climbed 2.4%.

“Investors are taking a bullish stance on the U.S. plan,” said Sunil Dhall, vice president at Gulf Baader Capital Markets in Muscat. “We’re seeing some indications that speculative money is returning to the market. This rally can be extended into the next week if we see crude oil prices continue to rise.”

The US Federal Reserve said yesterday it will purchase US$300 billion in Treasury securities and an additional US$750 billion of mortgage securities. The Fed will use newly created money to fund the purchases, increasing the supply of money in the market and helping to drive down rates.

Oil futures rallied 6% Thursday to above US50 for the first time in more than two months.

Crude oil for April delivery rose $US2.86, or 6%, to US$51 a barrel on the New York Mercantile Exchange. Earlier, the April contract, which expires on Friday, hit an intraday high of US$52.25 a barrel. Oil hasn't traded above US$50 since early January.

Abu Dhabi Commercial Bank surged 3.6% to AED1.75, after the lender said it plans to convert AED6.6 billion dirhams (US$1.8 billion) of federal government deposits into Tier 2 capital. The bank received the deposit as part of a government plan in October to inject AEd70 billion into local lenders to relieve the impact of the global credit crisis.

Commercial Bank of Dubai rose 3.7% to AED4.25 after the bank announced a similar plan to convert the government deposits into Tier 2 capital. Its shareholders also approved the issuance of 25% bonus shares and a 15% cash dividend.

Arabtec gained 2.5% to AED1.65.

The Doha Securities Market Index fell 0.8%. The Bahrain All Share Index rose 1%.

The Saudi Tadawul index was closed for the weekly weekend holiday.