Adds Pakistan and Chinese ministers speaking, paragraph 15, LNG tanker crosses strait and UK offers of deployment, 22-24

By Nandita Bose and Jana Choukeir

WASHINGTON/DUBAI, May 12 (Reuters) - Hopes for a peace deal with Iran dwindled on Tuesday after Donald Trump said a ceasefire was "on life support" as Tehran rejected a U.S. proposal to end the conflict and stuck to a list of demands the U.S. president described as "garbage".

Iran has called for an end to the war on all fronts, including Lebanon, where U.S. ally Israel is fighting Iran-backed Hezbollah militants. Tehran also emphasised its sovereignty over the Strait of Hormuz, demanded compensation for war damage, and an end to the U.S. naval blockade, among other conditions.

Trump, who will discuss the war with Chinese President Xi Jinping during his trip to Beijing this week, said Iran's response threatened the status of a ceasefire announced on April 7.

"I would call it the weakest right now, after reading that piece of garbage they sent us. I didn't even finish reading it," Trump, who has repeatedly threatened to end the ceasefire, told reporters on Monday. "It's on life support."

OIL EXTENDS GAINS

The U.S. had proposed an end to fighting before starting talks on more contentious issues, including Iran's nuclear programme.

Brent crude oil futures extended gains, climbing to more than $107 a barrel, as the deadlock left the Strait of Hormuz largely closed. Before the war began on February 28, the narrow waterway carried a fifth of the world's oil and liquefied natural gas shipments and has since become a central pressure point in the conflict.

U.S. Central Command said the aircraft carrier Abraham Lincoln was in the Arabian Sea enforcing the U.S. blockade, having redirected 65 commercial vessels and disabled four.

The Pentagon put the cost of the war at $29 billion so far, an increase of $4 billion from an estimate provided late last month. An official told lawmakers the new cost included updated repair and replacement of equipment and operational costs.

The war also has driven up gasoline prices across the U.S., where consumer prices rose at a brisk clip for a second straight month in April, resulting in the largest annual increase in inflation in nearly three years.

TRUMP'S TRIP TO CHINA

Surveys show the war is unpopular with U.S. voters less than six months before nationwide elections that will determine whether Trump's Republican Party retains control of Congress.

Two out of three Americans, including one in three Republicans and almost all Democrats, think Trump has not clearly explained why the country has gone to war, according to a Reuters/Ipsos poll completed on Monday.

Trump is expected to arrive in Beijing on Wednesday.

Trump wants China to convince Tehran to make a deal with Washington to end the conflict. China maintains ties with Iran and remains a major consumer of its oil exports. China’s foreign ministry has said the U.S. blockade of the strait does not serve the common interest of the international community.

The U.S. on Monday imposed new sanctions on individuals and companies it said were helping Iran ship oil to China, part of efforts to cut off funding for Tehran’s military and nuclear programmes, while also warning banks about attempts to evade existing curbs.

Pakistan's Foreign Minister Ishaq Dar and his Chinese counterpart Wang Yi discussed Islamabad's ongoing efforts to mediate an end to the conflict on Tuesday.

IRANIAN OFFICIALS STAND FIRM

Iranian officials, meanwhile, signalled continued resolve in the face of U.S. pressure.

A Fars news agency report cited Mohammad Akbarzadeh, deputy political director of the Islamic Revolutionary Guard Corps Navy, as saying Iran had expanded its definition of the Strait of Hormuz into a "vast operational area" under a new plan.

There was no immediate reply from Iranian authorities to a request for comment on Akbarzadeh's remarks, which defined the waterway as a zone stretching from the coast of the city of Jask in the east to Siri Island in the west.

Iran’s defence ministry spokesperson said any new attack by an enemy would be met with an immediate response, according to state media. In Tehran, the Guards held drills "centred on preparation to confront the enemy", state TV reported.

LNG TANKER GOES THROUGH STRAIT OF HORMUZ

Traffic through the Strait of Hormuz remains at a trickle.

A second Qatari LNG tanker successfully went through the Strait of Hormuz on Tuesday, days after the first such cargo crossed under an arrangement involving Iran and Pakistan.

As countries continued preparations for what might come after any lasting peace deal, Britain said it would contribute autonomous mine-hunting equipment, fighter jets and the warship HMS Dragon to a multinational defensive mission aimed at securing shipping in the strait.

Defence minister John Healey announced the commitment during a virtual summit with more than 40 of his counterparts from other nations involved in the mission, which he said would become operational when conditions allowed.

Kuwait, meanwhile, summoned Iran’s ambassador and handed him a protest note over what it said was the infiltration of Bubiyan Island by armed members of Iran’s Revolutionary Guards and clashes with Kuwaiti armed forces, the foreign ministry said. There was no immediate reaction from Iran.