April 20 (Reuters) - Gulf equities retreated in early trade on Monday, on fears the ceasefire between Washington and Tehran could unravel after the U.S. seized an Iranian cargo vessel, while traffic through the Strait of Hormuz remained largely suspended.
Hopes for a more lasting peace in the region dimmed after Iranian state media reported that Tehran had rejected fresh talks and would not take part in a second round of negotiations the U.S. had hoped to convene before the ceasefire expires on Tuesday.
Now in its eighth week, the war has triggered a historic shock to global energy supplies, sending oil prices soaring as the Strait of Hormuz remains effectively closed.
Dubai's main share index (.DFMGI), dropped 1.3%, hit by a 1.4% fall in blue-chip developer Emaar Properties (EMAR.DU), and a 2.2% slide in toll operator Salik Co (SALIK.DU).
Shares in Abu Dhabi (.FTFADGI), lost 0.3%.
The United Arab Emirates has begun talks with the United States on a potential financial backstop should the U.S.-Israeli war with Iran deepen the Gulf nation's crisis, the Wall Street Journal reported on Sunday. Reuters could not immediately verify the report.
The Qatari index (.QSI), opens new tab lost 0.4%, with Qatar Islamic Bank (QISB.QA), dropping 1.1%.
Trump had earlier warned that the United States would destroy Iran's bridges and power plants if Tehran refused his terms, repeating threats he had made throughout the war.
Iran, meanwhile, said any U.S. attack on its civilian infrastructure would trigger strikes on power stations and desalination plants in neighbouring Gulf Arab states.
Saudi Arabia's benchmark index (.TASI), edged 0.3% lower in a choppy trade, weighed down by a 0.4% fall in Al Rajhi Bank (1120.SE). On the other hand, Saudi Aramco (2222.SE), gained 0.3%.
Brent crude futures jumped about 7% to $96.85 a barrel in early Asian trading, as investors dealt with conflicting messages about the war.
Reporting by Ateeq Shariff in Bengaluru; Editing by Janane Venkatraman and Mrigank Dhaniwala
