DUBAI, Dec 25 (Reuters) - Saudi Arabia's stock market surged in early trade on Sunday in response to the release of the 2017 state budget, which includes an increase in government spending next year to support flagging economic growth. urn:newsml:reuters.com:*:nL5N1EH10N

The Saudi stock index .TASI added 1.1 percent to 7,167 points in the first 15 minutes, nearing technical resistance on this year's peak of 7,235 points, hit earlier this month.

Utility Saudi Electricity 5110.SE jumped 6.6 percent after the government said in the budget it would raise domestic fuel and electricity prices by unspecified margins later this year.

The petrochemical sector was generally strong after the government said it would not raise gas feedstock prices before 2019. A feedstock price hike in the 2016 budget squeezed some petrochemical producers' margins.

Construction firm Abdullah Abdul Mohsin al-Khodari and Sons 1330.SE gained 1.9 percent after the government pledged to raise infrastructure spending, said it had settled unpaid bills to the private sector and promised to settle future bills within 60 days of receiving them. The construction sector was plagued by delays in recovering money from the government this year.

Zain Saudi 7030.SE rose 1.2 percent after saying it was in talks to sell its mobile transmitter towers to a consortium of TASC SAL and ACWA Holding IPO-ACWA.SE . urn:newsml:reuters.com:*:nL5N1EH31I

Rival Mobily 7020.SE underperformed the market slightly, edging up 0.4 percent, after the United Arab Emirates' Etisalat ETEL.AD , which owns 27.4 percent of Mobily, said its management agreement with Mobily had expired. urn:newsml:reuters.com:*:nL5N1EK015

Elsewhere in the Gulf, markets moved little and trade was thin because of the absence of foreign investors during the Christmas holidays.

Dubai's index .DFMGI was almost flat and Abu Dhabi .ADI edged up 0.2 percent as Etisalat rose 1.1 percent. Qatar's index .QSI inched up 0.1 percent.

(Reporting by Andrew Torchia; Editing by Paul Tait) ((andrew.torchia@thomsonreuters.com)(+9715 6681 7277)(Reuters Messaging: andrew.torchia.thomsonreuters.com@reuters.net))