He kicks off his tour in Kuwait before heading for Bahrain, the United Arab Emirates and Saudi Arabia on a trip he has said aims to curtail Tehran's "aggressive ambitions."

It will be the first time a serving US president has been to Bahrain and the UAE.

After two days of talks with Israeli and Palestinian leaders, Bush on Thursday in Jerusalem called on "Arab countries to reach out to Israel, a step that is long overdue."

The US president predicted on an optimistic note the signing of a Middle East peace treaty within a year and called for an end to Israel's four-decade occupation of Palestinian land.

Kuwait, which has thousands of US troops based in the emirate, will welcome Bush as a friend but is wary over Washington's possible use of force against neighbouring Iran.

Like other US allies in the oil-rich Gulf, Kuwait is concerned that Bush may try to whip up support for military action against Iran, which Washington has accused of seeking nuclear weapons. Tehran denies any such intent.

Senior Kuwaiti officials, including the defence and foreign ministers, have repeatedly said that the emirate will not allow the United States to use Kuwait as a launchpad for any strike against Iran.

Kuwait was a springboard for the 2003 US-led invasion of Iraq that toppled Saddam Hussein, who in 1990 ordered Iraqi forces to invade his tiny neighbour.

Bush's father, George Bush, a former US president himself, is regarded as a hero in Kuwait for leading a multinational coalition which evicted Iraqi occupation forces from the emirate in the 1991 Gulf War.

Around 15,000 US troops are permanently stationed in Kuwait at one of Washington's largest military bases in the region, Camp Arifjan, that is used as a transit point for US-led coalition forces in Iraq.

Bush began his regional tour in Israel on Wednesday with a warning that Iran posed "a threat to world peace" and should not be allowed to develop the know-how to build a nuclear weapon.

He also warned Tehran of "serious consequences" if it attacked US warships in the Gulf.

On Sunday three US Navy vessels and Iranian speedboats were involved in an incident in the Strait of Hormuz at the entrance to the Gulf during which the Americans said the Iranians radioed a threat to blow them up.

The US Navy's Fifth Fleet is based in Bahrain, Bush's next stop after Kuwait. Washington calls the archipelago state a "major non-NATO ally."

Shiite-majority Bahrain is ruled by a Sunni dynasty which has hailed the US president's trip as historic.

Also while in Israel, Bush issued a thinly veiled warning that the United States, which has never ruled out a military strike against the Islamic republic, could strike back against Iran if American ships were attacked.

"All options are on the table to protect our assets," he said.

The United States on Thursday made a formal protest to Iran. "We have in fact now prepared and given to the Swiss a diplomatic note formally protesting this incident," the State Department said.

Iran and the United States do not have formal diplomatic relations and Switzerland looks after US interests in Tehran via its embassy in the Islamic republic.

Tehran accuses Washington of using the incident in the strategic waterway -- a vital conduit for energy supplies -- as a propaganda stunt to paint Iran in a bad light during Bush's Middle East trip.

Bush's next stop will be the UAE, a prime target in Washington's drive to isolate Iran over its nuclear programme.

Despite a longstanding territorial row, the UAE is also Iran's largest trading partner with an estimated 10,000 Iranian firms in Dubai, making the city state Iran's main business hub.

The oil-rich Gulf monarchies, including Qatar which Bush visited in 2003, all have close military ties with the United States and are major buyers of American weaponry.

While a US intelligence report made public last month said Tehran halted a secret nuclear weapons programme in 2003, many people in the Gulf worry that Washington is intent on a military showdown with Iran.

Echoing frequent criticism of US policies in the regional press, columnist Iman Kurdi wrote in the Saudi daily Arab News that Bush's "blood lust" means that he may yet choose to "go out (from office in January 2009) with a bang."

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