The United Arab Emirates (UAE) has scrapped its economic boycott against Israel to allow trade and financial agreements between the two countries in another key step towards normal ties.

UAE's state-run WAM news agency said Sheikh Khalifa bin Zayed Al Nahyan, the ruler of Abu Dhabi, had formally ended the boycott of Israel which had stood since 1972.

The new decree, announced at the weekend,  allows Israeli firms to do business in the UAE and  also allows for the purchase and trade of Israeli goods.

WAM said the move was part of "a roadmap toward launching joint cooperation, leading to bilateral relations by stimulating economic growth and promoting technological innovation". 

It added that the “decree of the new law comes within the UAE's efforts to expand diplomatic and commercial cooperation with Israel.”

The deal to open up relations between Israel and the UAE was announced on August 13.  Brokered by the United States it required Israel to halt its plan to annex occupied West Bank land sought by the Palestinians.

On Monday, the first direct commercial flight by Israel's El Al airline  is expected in Abu Dhabi, carrying US and Israeli officials including President Donald Trump's son-in-law, Jared Kushner.

The UAE had previously adopted a position similar to other Arab states in which they insisted recognition of Israel would only come after the Palestinians had an independent state of their own.

Hamas, the Islamist extremist group that controls the Gaza Strip, condemned the new deal with Israel as  a "treacherous stab in the back". 

The UAE follows Egypt and Jordan to become the third Arab country to have diplomatic ties with Israel.