The Qatari stock index, which had lost 9.7 percent over three days since Saudi Arabia and the United Arab Emirates cut diplomatic and trade relations, bounced 3.0 percent.
The mood in Doha remained nervous; Standard & Poor's downgraded Qatar's credit rating on Wednesday night, and the economic damage to Qatar from the rift could become serious if foreign banks pull out funds.
Nevertheless, fund managers noted that many Qatari blue chips had fallen to relatively attractive valuations. Investors are also hoping that mediation efforts over the weekend will help bring a resolution for the dispute.
Some of the stocks most heavily beaten down early this week on fears that Qatar's foreign trade would suffer rebounded most strongly, with Gulf Warehousing shooting up 9.1 percent.
Qatari Investors Group jumped 10 percent after saying it had won two lawsuits filed against it by Sanad Al Doha Real Estate Investment Co and Ezdan Holding. The suits had sought to oust the group's board of directors, it said.
Saudi Arabia's index fell back 1.2 percent after the Brent oil price tumbled 4 percent overnight. Among major losers, travel firm Al Tayyar sank 3.9 percent.
Atheeb Telecommunications rose 3.9 percent after saying it had obtained new frequencies for its operations at a cost of 2.07 billion riyals ($552 million).
Dubai's index fell 0.2 percent as Emaar Properties , which had surged 8.6 percent on Wednesday after saying it planned an initial public offering of up to 30 percent of its United Arab Emirates real estate development business, slipped back 0.3 percent.
Ubhar Capital estimated Emaar shareholders would receive a dividend of 0.92 dirham per share as a result of the IPO, assuming the full IPO proceeds were paid out. That compares with a 2016 dividend from Emaar Properties of 0.15 dirham.
Builder Drake & Scull, which has been rebounding for a couple of weeks from a 15-month low, climbed 4.3 percent in its heaviest trade since mid-February.
In Abu Dhabi, the index rose 0.5 percent as Dana Gas continue to outperform, adding 3.9 percent. It leaped 10.9 percent on Wednesday after saying it had received $40 million from the Egyptian government towards its outstanding receivables.