* Abu Dhabi records lowest close in 2015

* Saudi settles marginally above critical 7,000 points

* State budget announcements this month shape sentiment

By Celine Aswad

DUBAI, Dec 9 Gulf markets saw volatile trading on Wednesday as falling oil prices and their impact on upcoming state budgets pushed some to multi-year lows, while others edged into positive territory after heavy losses the previous day.

Dubai's benchmark dropped 0.3 percent to its lowest close in two years, dipping to 3,001 points.

Financial stocks dragged the index with Emirates NBD tumbling 2.9 percent to 7.5 dirhams, its lowest close of 2015.

Abu Dhabi's bourse was also weighed down by banks as the market slipped 0.6 percent to 4,084 points, the lowest closing level in 12 months.

First Gulf Bank and National Bank of Abu Dhabi declined 2.1 and 1.7 percent respectively, although heavyweight Etisalat softened the impact by gaining 0.3 percent.

Qatar's index was also knocked to a two-year low as it flirted with the 10,000-point mark before ending a shade above it but down 0.8 percent on the day.

BUDGETS

Investors are concerned about the implications for lower oil prices on local economies as many states prepare to announce their budgets for 2016, and are waiting for confirmation on spending for next year before taking positions in local markets.

Economic growth in the United Arab Emirates in 2015 is expected to come in lower than forecast earlier in the year, the country's economy minister said on Tuesday.

Lower oil prices have been negative for the UAE's fiscal and external surpluses, and the trickle down into the real economy is the concern.

"We believe the slowdown in growth in the non-oil sector is likely to be moderately supported by continued public sector spending, particularly in Abu Dhabi," according to a report published by Abu Dhabi's ADCB Securities on Tuesday.

Qatar's 2016 budget was in the final stages of preparation and will be presented soon, Qatar's finance minister said on Wednesday, adding Doha will use a more conservative break-even oil price to base its budget on than the previously-used $65 a barrel.

In Saudi Arabia, the exact date of the budget's publication is still unknown, and much is on hold until there is greater policy clarity from the government.

Al Khodari, a Saudi builder, said Wednesday it had postponed a planned rights issue because it is waiting for the kingdom's budget. It also revealed two construction contracts with the education ministry worth 315 million riyals ($84 million) had been halted for budgetary reasons.

The contractor ended Wednesday down 0.6 percent.

BARGAIN HUNTERS

The wider Saudi index climbed 0.1 percent to 7,001 points, settling just above the psychological support level after breaching this mark on Tuesday, as bargain hunters supported it.

Emaar Economic City surged 9.6 percent and was one of the most heavily-traded stocks on the exchange. It fell 3.9 percent a day earlier.

Saudi Telecom jumped 1.5 percent, rebounding after four straight sessions of losses.

Egypt's index edged up 0.3 percent after two days of losses.

Foreign investors overtook Arab investors as the heavy sellers, exchange data showed. Arabs aggressively sold on Tuesday.

WEDNESDAY'S HIGHLIGHTS

DUBAI

* The index fell 0.3 percent to 3,001 points.

ABU DHABI

* The index dropped 0.6 percent to 4,084 points.

QATAR

* The index declined 0.8 percent to 10,019 points.

SAUDI ARABIA

* The index rose 0.1 percent to 7,001 points.

EGYPT

* The index climbed 0.3 percent to 6,629 points.

KUWAIT

* The index dipped 0.4 percent to 5,730 points.

BAHRAIN

* The index increased 0.4 percent at 1,213 points.

OMAN

* The index rose 0.6 percent to 5,503 points. (Editing by David French and Tom Heneghan)