From Atiq Sharif

May 12 (Reuters) - Most major stock markets in the Gulf region fell on Tuesday as hopes faded for a deal to end the U.S.-Israeli war on Iran, amid sharp disagreements between Tehran and Washington over a peace proposal.

US President Donald Trump said on Monday that the ceasefire with Iran was "on the verge of collapse," citing disagreements over several demands, including a halt to hostilities on all fronts, the lifting of the US naval blockade, the resumption of Iranian oil exports, and compensation for war damages.

Tehran also stressed its sovereignty over the Strait of Hormuz, through which about one-fifth of the world's oil and liquefied natural gas supplies pass.

The Saudi index fell 1.1 percent after Al Rajhi Bank shares dropped 1.6 percent and ACWA Power shares declined 8.9 percent.

However, shares of oil giant Saudi Aramco rose 0.6 percent.

Brent crude futures rose $3.44, or 3.3 percent, to $107.65 a barrel by 1315 GMT.

Stock markets in the Gulf states remained under pressure after the US president rejected the latest proposal from Iran, raising concerns about renewed tensions in the region.

Milad Azar, market analyst at XTB Middle East and North Africa, said that any escalation could negatively affect investor confidence and limit hopes for a quick resolution.

He added that the Strait of Hormuz crisis "may lead to continued disruption of logistics and push oil prices higher."

Dubai's index fell 0.6 percent after Emirates NBD lost 2.7 percent and Emaar Properties lost 2.1 percent.

The Abu Dhabi index also fell 0.9 percent, affected by a 3 percent drop in ADNOC Gas shares due to the company's lower first-quarter profits.

The Wall Street Journal reported yesterday, citing informed sources, that the UAE launched military strikes against Iran, including an attack in April on an oil refinery on Lawn Island.

The UAE has not announced the strikes, and Reuters has not yet been able to verify this report.

The Qatari index fell by one percent at the close.

Bahrain's index rose 0.2 percent to 1933 points.

Outside the Gulf region, Egypt's blue-chip index closed down 0.8 percent.