By Celine Aswad

DUBAI, Jan 17 (Reuters) - Qatar's stock market rose to a multi-month high on Tuesday in the heaviest volume since late November, buoyed by the banking sector, while firmer oil prices supported the rest of the Gulf and foreign investors bought up Egyptian shares.

Qatari Islamic bank Masraf Al Rayan MARK.QA jumped 4.0 percent to 40.45 riyals after its board recommended a dividend for 2016 of 2.0 riyals per share, above the 1.75 riyals paid in 2015. It is in talks to merge with two other local lenders.

It reported an 8 percent drop in fourth-quarter net profit to 515.0 million riyals ($141.5 million), mid-way between EFG Hermes' forecast of 478.4 million riyals and QNB Financial Services at 549.7 million riyals.

Analysts at QNB Financial said that despite the weaker earnings, net loans grew 8.1 percent; they maintained a "market perform" rating on the stock.

Two other major banks that have not yet reported earnings were also strong, helping lift the Qatari index .QSI by 1.6 percent to a fresh five-month high. Doha Bank DOBK.QA was the top performer, surging 6.0 percent, and Qatar Islamic Bank QISB.QA gained 3.1 percent.

Saudi Arabia's index .TASI swung 0.7 percent higher with most buy orders executed in the final hour of trade as Brent crude oil futures climbed back over $56.0 a barrel. Eleven of the 14 listed petrochemical producers advanced with Saudi Basic Industries 2010.SE adding 1.1 percent.

Banking shares, which were hard hit on Monday following Riyad Bank's 1010.SE disappointing fourth-quarter results, recovered with National Commercial Bank 1180.SE adding 1.5 percent. Bank Albilad 1140.SE jumped 5.0 percent after reporting an 8.4 percent rise in quarterly net profit. But Riyad Bank fell a further 0.9 percent.

Saudi Cement 3030.SE added 0.8 percent after reporting a quarterly net profit of 187 million riyals ($49.9 million), up from 176 million riyals a year ago but below the average forecast of five analysts of 199.2 million riyals.

Real estate developer Jabal Omar Development 4250.SE climbed 1.4 percent after swinging to a net profit of 79.3 million riyals. It cited higher sales of residential units and an increase in revenue from its hospitality segment.

Cairo's index .EGX30 rose 1.3 percent to a fresh all-time high of 13,436 points as foreign funds were relatively heavy buyers of Egyptian shares, bourse data showed.

"Positive sentiment will continue to support the market and this is likely to be the case until there is specific, negative news that reverses the uptrend," said Allen Sandeep, head of research at Cairo's Naeem Brokerage.

Heliopolis Co for Housing and Development HELI.CA , the top gainer, jumped 6.1 percent.

Investment firm EFG Hermes HRHO.CA added 2.2 percent to 28.40 Egyptian pounds. Analysts at Beltone Financial revised its target price higher to 34-36 Egyptian pounds because of the possibility of higher revenues from its investment banking division and higher brokerage revenues due to the surge in stock market trading volume since the pound was floated on Nov. 3.

Dubai's index .DFMGI edged up 0.1 percent. Daily trading volume fell with most activity focused on small and mid-sized shares favoured by local day traders. Islamic Arab Insurance SALAMA.DU jumped 3.3 percent.

TUESDAY'S HIGHLIGHTS



SAUDI ARABIA



* The index .TASI added 0.7 percent to 6,874 points.



DUBAI



* The index .DFMGI edged up 0.1 percent to 3,672 points.



ABU DHABI



* The index .ADI rose 0.2 percent to 4,663 points.



QATAR



* The index .QSI gained 1.6 percent to 10,928 points.



EGYPT



* The index .EGX30 rose 1.3 percent to 13,436 points.



KUWAIT



* The index .KSWE added 1.2 percent to 6,301 points.



OMAN



* The index .MSI fell 0.2 percent to 5,737 points.



BAHRAIN



* The index .BAX rose 0.7 percent to 1,229 points. (Editing by Andrew Torchia and Gareth Jones) ((celine.aswad@thomsonreuters.com)(+971 5 6224 7653)(Reuters Messaging: celine.aswad.thomsonreuters.com@reuters.net))