Saudi Arabia's stock market rose on Tuesday, boosted by its banking shares, while all major Gulf markets rebounded from recent sell-offs, in line with Asian shares.

Saudi's index increased 0.6% in early trade, with Al Rajhi Bank adding 1.2% and Saudi Basic Industries up 0.9%.

MSCI last week said it would include MSCI Saudi Arabia in its emerging-markets index, effective May 28, a move that could draw billions of dollars into the market.

The index is up 8.8% so far this year in a rally led by foreign investors.

"The index inclusion story is (the) dominant theme ... for foreign investors on Saudi's equity market," said Lighthouse Research.

In the week ending May 16, foreign investors bought a net 3.9 billion riyals ($1.04 billion) of Saudi shares, nearly four times their average weekly net purchases since the start of 2019 and the 20th consecutive week of net buying, added Lighthouse.

Abu Dhabi's index jumped 1.1%, led by a 1.7% increase in First Abu Dhabi Bank.

Dana Gas was up 1.8% after the energy firm said it had started drilling operations at Merak-1 well, offshore Egypt.

Qatar's index gained 0.5%, with Mesaieed Petrochemical Holding jumping 7.6%.

The stock has been surging recently after it was included in MSCI's index. Since May 14, the stock has added 53%.

The Dubai index edged up 0.1%. National Cement Company was up 1.7% after news it had bought Kenya's ARM Cement's assets for $50 million.

Arabtec Holding rebounded 2.1%, snapping four straight sessions of losses on weak first-quarter earnings.

($1 = 3.7500 riyals)

(Reporting by Ateeq Shariff in Bengaluru; Editing by Mark Potter) ((; +918067497129;))