* Saudi market gains 0.6 pct in active trade

* Alinma Bank surges on 2014 dividend news

* Dubai construction firms boosted by Saudi budget news

* Oman's Al Anwar jumps 10 pct on possible share buy-back

* Egypt's Palm Hills rises after board member buys

By Andrew Torchia

DUBAI, Dec 25 (Reuters) - Gulf stock markets rose on Thursday as Saudi Arabia released a 2015 state budget that will keep spending high, reassuring the region that economic growth is unlikely to be hurt much by the plunge of oil prices.

The Saudi budget envisions state spending at a record 860 billion riyals ($230 billion) next year, up 0.6 percent from the 2014 budget plan.

That would be the smallest rise in over a decade, but much better than the possible spending cuts that the markets were worrying about early this month. A 145 billion riyal budget deficit would be covered by the government's huge reserves.

"The fact that spending is expected to be steady is positive for confidence, especially regarding their investment programme," said Monica Malik, chief economist at Abu Dhabi Commercial Bank.

In the past few days, the Saudi stock market had already started rebounding from early December's sharp losses after Finance Minister Ibrahim Alassaf declared there was no need for major austerity.

The main index rose a further 0.6 percent in active trade to 8,749 points on Thursday, confirming a break of its downtrend line from September - a positive technical signal.

The most heavily traded stock, Alinma Bank, surged 4.3 percent after its board recommended a dividend of 0.5 riyal per share for 2014. It would be the bank's first dividend since it listed on the stock market in 2008.

Saudi Arabian Mining Co (Ma'aden) soared 7.9 percent to 30.90 riyals in its heaviest trade since May, after Riyad Capital lifted its price target for the stock to 49 riyals from 46 riyals.

Saudi Public Transport Co, a bus and road transport company which could benefit from infrastructure building plans in the 2015 budget, jumped 8.9 percent in heavy trade.

Second-tier insurance stocks, a focus of attention for retail investors in the past few days, pulled back as interest shifted to the bigger stocks. Malath Cooperative Insurance plunged 8.2 percent.

DUBAI

Other Gulf markets pulled back slightly in early trade but rose after the Saudi budget was announced. Dubai climbed 1.4 percent, though turnover remained moderate with many investors away for end-of-year holidays.

Construction firms with actual or potential projects in Saudi Arabia gained after the budget news. The most heavily traded stock, Arabtec, climbed 5.3 percent while Drake and Scull surged 8.0 percent.