By Mohd Edrees

June 5 (Reuters) - Stock markets in the United Arab Emirates closed higher on Friday, with Dubai outperforming its regional peer despite fading hopes for a diplomatic breakthrough in the U.S.-Israeli conflict with Iran.

The Iran-backed Hezbollah militia rejected a new ceasefire in Lebanon on Thursday and Israel said it would not withdraw troops from the country, undermining U.S. President Donald Trump's efforts to halt fighting there and reach a peace deal with Tehran.

Dubai's main share index .DFMGI rose 0.9%, supported by gains in industrial and utilities sector stocks.

Toll operator Salik Company SALIK.DU jumped 1.6%, while Emirates Central Cooling Systems EMPOWER.DU increased 2.5%.

Abu Dhabi's benchmark index .FTFADGI settled 0.3% up, with the largest utility firm Abu Dhabi National Energy TAQA.AD advancing 6.2%.

Alef Education ALEFEDT.AD gained 1% after the firm completed full migration of its digital learning ecosystem to Microsoft Azure with Core42's sovereign cloud capabilities.

Brent crude LCOC1 was down 0.32% at $94.73 a barrel by 1232 GMT. O/R