Asian stocks, riding a Wall Street rally, were cheered by China's central bank decision to alter the way it sets a key interest rate benchmark, a move seen by analysts as reducing borrowing costs for companies.

Crude oil prices rose following a weekend attack on a Saudi oil facility by Yemeni separatists and as traders looked for any signs that Sino-U.S. trade tensions could ease.

Saudi Arabia's index advanced 1% with most of its banking stocks trading positively. National Commercial Bank rose 2.1% and Al Rajhi Bank was up 0.9%.

Elsewhere, Zain Saudi gained 1.3% after the telecom operator said it had commenced negotiation with Ministry of Finance to convert outstanding debts into shares.

Dubai's index traded 0.3% higher with blue-chip developer Emaar Properties and Dubai Islamic Bank both gaining 0.6%.

Shuaa Capital, which merged with Abu Dhabi Financial Group earlier this month, rose 0.8%. The investment firm announced the transfer of new issued shares as part of the merger deal.

Qatar's index rose 0.2% extending gains in the previous session when it ended a three-day losing streak. Qatar National Bank, the Gulf's largest lender, boosted the index most, trading 1.5% higher.

Abu Dhabi's index slipped 0.1% as First Abu Dhabi Bank declined 0.3% and Emirates Telecommunications Group lost 0.4%.