From Ateeq Sharif

Oct 7 (Reuters) - Most Gulf stock markets closed higher on Tuesday as investor optimism about possible U.S. interest rate cuts and stabilizing oil prices outweighed concerns about a U.S. government shutdown.

As the government shutdown continues into its second week, investors are turning to private and alternative economic data to assess the path of US interest rates, amid expectations of a 25 basis point cut in borrowing costs at this month's monetary policy meeting.

The Gulf countries are affected by the position of the Federal Reserve (the US central bank) because most of these countries peg their currencies to the dollar.

Dubai's main index rose 0.5 percent, with Emirates NBD shares rising 2.6 percent.

In Abu Dhabi, the index closed up 0.2 percent.

Oil prices stabilized, a catalyst for Gulf financial markets, as investors weighed a smaller-than-expected increase in OPEC+ production for November against a potential increase in supply.

The Qatari index rose 0.2 percent, supported by a 0.8 percent rise in Qatar Islamic Bank shares.

Market participants are assessing US President Donald Trump's plan to end the two-year-old war in the Gaza Strip, which aims to ease ongoing geopolitical tensions.

However, the Saudi stock market's main index fell 0.2 percent, ending two sessions of gains, impacted by a 1.8 percent drop in shares of Saudi Arabian Mining Company (Ma'aden).

Outside the Gulf region, Egypt's leading stock index closed flat.

A Reuters poll predicted that Egypt's annual urban inflation rate would slow to 11 percent in September, continuing the downward trend it has witnessed over the past two years.

(Prepared by Muhammad Aysam for the Arabic edition - Edited by Muhammad Attia)