* Dubai posts biggest rise since June 2017
* Local institutions buy real estate stocks
* Dubai is world's worst 2018 performer in local currency terms
* Qatar, Kuwait, Saudi all beat emerging market index in 2018
* Oil is a worry but MSCI to bring fund inflows
DUBAI, Dec 31 (Reuters) - Dubai's beaten-down stock market rose sharply on Monday as the largest Gulf bourses ended a year in which most outperformed global benchmarks, although soft oil prices cloud the outlook for 2019.
The Dubai index, which hit five-year lows last week, surged 2.4 percent -- it biggest rise since June 2017 -- as real estate stocks rebounded. Emaar Properties gained 3.3 percent and DAMAC Properties added 4.1 percent.
Dubai's bounce still left it down 24.9 percent for all of 2018, making it the world's worst-performing major stock market for the year in local currency terms, marginally underperforming indexes in Shanghai and Athens.
Exchange data showed buying by local institutions supported the market on Monday.
Slumping Dubai real estate prices, a major cause of the stock market's weakness in 2018, still show no clear sign of recovering. Foreign investors sold a net $77.9 million of Dubai stocks in the last quarter of 2018, a large amount by historical standards, exchange data shows.
Other big Gulf markets fared much better during 2018, however. Saudi Arabia rose 0.2 percent on Monday, bringing its annual gain to 8.3 percent -- far outperforming a 16.9 percent drop by MSCI's emerging market index.
A $30 slide in oil prices since October has cast a shadow over Gulf markets' performance in 2019.
Partly because of weak oil prices, "consumer and business sentiment remains depressed across the region," said Akber Khan, head of asset management at Al Rayan Investment in Doha.
However, Saudi Arabia is due to join the emerging market indexes of MSCI and FTSE Russell next year, which is expected to attract $15 billion of passive, index-linked funds to Riyadh and billions more in active funds.
As a result, Saudi Arabia was the favorite market of fund managers polled by Reuters late this month, with 54 percent expecting to raise their Saudi equity allocations and none to reduce them in the next three months.
Talal Samhouri, head of asset management at Amwal in Qatar, said Saudi Arabia's National Commercial Bank and Al Rajhi were the regional banks best positioned to benefit from rising interest rate margins in coming months.
Kuwait's blue-chip index, up 9.9 percent in 2018, also outperformed other emerging markets by a big margin. Interest in Kuwait has been fueled by its entry into FTSE Russell's emerging market index in 2018 and MSCI's decision to consider in 2019 whether to upgrade Kuwait to that status.
Qatar's index closed Monday up 20.8 percent for the year, making it one of the world's best performing markets. Stocks rose sharply in 2018 as companies raised limits on foreign ownership of their shares, a factor which could fade in 2019 as MSCI hopes draw funds to Saudi Arabia and Kuwait.
* The index rose 0.2 percent to 7,827 points
* The EGX 30 Index gained 0.7 percent to 13,036 points
* The index surged 2.4 percent to 2,530 points
* The index rose 1.9 percent to 4,915 points
* The Index added 0.2 percent to 10,299 points
* The index edged up 0.1 percent to 5,267 points
* The index rose 0.4 percent to 1,337 points
* The index fell 0.4 percent to 4,324 points
(Reporting by Andrew Torchia; Editing by Jon Boyle)