* Dubai, Abu Dhabi far underperform MSCI emerging index in 2017
* Governments to boost spending in 2018
* No sign that geopolitical threats will ease
* Dubai builders, property developers strong on Thursday
* Saudi's Sahara Petrochemical jumps on dividend news
By Andrew Torchia
DUBAI, Dec 28 (Reuters) - United Arab Emirates stock markets rose on Thursday, their last day of trade during a year in which they were among the world's worst-performing emerging markets, while most other Middle Eastern bourses also gained.
Dubai's stock index fell 4.6 percent during 2017 while Abu Dhabi's index lost 3.3 percent; MSCI's emerging markets index gained about 34 percent.
Geopolitical tensions, a regional economic slowdown caused by low oil prices, and slumping real estate markets in Dubai and Abu Dhabi all pulled down their stock markets.
Some fund managers expect a better 2018; regional growth is likely to pick up on the back of expansionary state budgets, as the partial rebound of oil prices late this year gives Saudi Arabia and Abu Dhabi room to loosen austerity policies, and Dubai spends heavily to prepare for hosting Expo 2020.
Nevertheless, unresolved geopolitical threats - including tensions with Iran, the conflict in Yemen, instability in Lebanon and a boycott of Qatar - will continue to weigh on the region, many fear.
"We see more downside risk for the UAE than we do for Saudi simply because the UAE business model was based on political neutrality and stability," MENA Capital, which invests in equities across the region, said in a report.
The Dubai index rose 0.7 percent on Thursday, buoyed in part by construction firms that could benefit from higher government spending on infrastructure next year.
Drake & Scull rose 2.7 percent to 2.26 dirhams in heavy trade. It posted a big third-quarter loss but investors are hoping for much better fourth-quarter results now that a recapitalisation has been completed, which may help it obtain operating funds.
Some analysts believe the stock, which has jumped from around 1.70 dirhams in mid-November, is overvalued, however; earlier this month, Deutsche Bank cut it to "sell" from "hold" with a 1.13 dirham target price.
Builder Arabtec gained 0.9 percent after saying a unit had won a 1.025 billion dirham ($279 million) contract from Dubai Properties, part of the investment vehicle of Dubai's ruler, for work on a residential community.
Dubai property developers were also strong, with blue chip Emaar Properties climbing 2.4 percent.
Abu Dhabi's index added 0.7 percent, helped by companies which could benefit directly from this week's surge of oil prices: Dana Gas rose 2.5 percent and fuel distributor ADNOC Distribution gained 1.5 percent.
Most other Middle Eastern stock markets will trade for the last time in 2017 on Sunday. In Saudi Arabia, the index rose 0.4 percent on Thursday as most petrochemical firms stayed strong in the wake of the oil price increase.
Sahara Petrochemical jumped 3.6 percent after proposing a dividend of 1 riyal per share for 2017, up from 0.75 riyal for 2016.
Al Samaani Factory Metal Industries soared 9.5 percent after proposing a capital increase through a bonus share issue, and an annual dividend of 1.5 riyal per share.
Qatar's index rose 0.3 percent as Vodafone Qatar, which shot up by more than a third between mid-November and the start of this week, resumed rising in volatile trade and closed 0.9 percent higher.
* The index gained 0.4 percent to 7,231 points.
* The index rose 0.7 percent to 3,370 points.
* The index climbed 0.7 percent to 4,398 points.
* The index gained 0.3 percent to 8,526 points.
* The index rose 0.8 percent to 15,017 points.
* The index added 0.6 percent to 6,408 points.
* The index rose 0.9 percent to 1,306 points.
* The index edged up 0.1 percent to 5,047 points. (Editing by Andrew Bolton)