KUALA LUMPUR (BLOOMBERG) - Malaysian stocks climbed the most in two years on Tuesday (Sept 1) and the currency strengthened after protests calling for the resignation of Prime Minister Najib Razak ended peacefully and an overnight surge in crude prices spurred rallies by oil producers.

The FTSE Bursa Malaysia KLCI Index rose as much as 2.9 per cent, the biggest advance since May 2013, before paring gains to 1.1 per cent at 9:19 am in Kuala Lumpur. SapuraKencana Petroleum Bhd jumped 8.1 per cent. The ringgit appreciated 0.9 per cent versus the US dollar. The nation's markets were closed on Monday for holidays.

The Malaysian equity index fell 15 per cent from its July 2014 high through Friday as political uncertainty clouded the outlook for an economy hit by slumping oil prices and an emerging-market selloff.

Weekend rallies organised by pro-democracy group "Bersih" (Clean) that saw tens of thousands of people in the capital failed to draw a large number of ethnic Malays, a sign that a funding scandal is yet to spur major dissent within the premier's grassroots power base.

Crude surged 8.8 per cent in New York on Monday to cap a three-day, 27 per cent gain. Malaysia is Asia's only major net oil exporter.