LONDON (Reuters) - Hopes of a ceasefire deal to end the war in Gaza lifted the region's government bond markets and Israel's shekel on Tuesday as investors sensed relief after 15 months of conflict.

Negotiators were meeting in Qatar hoping to finalise a ceasefire and hostage release agreement after U.S. President Joe Biden indicated that one was within reach.

More than six hours after talks began there was still no word on an outcome but Israel's bonds and those of Lebanon, Egypt and Jordan were all edging higher as optimism built.

Israel's shekel and Egypt's pound were also both fractionally higher in the currency markets.

Clinching a ceasefire deal would cap a historic few months in the Middle East.

It has included the killing by Israel of Hamas leader Yahya Sinwar, Iran-backed Hezbollah being weakened enough to allow Lebanon to elect a new president and perhaps most surprising of all, Syria's veteran leader Bashar Al-Assad being toppled.

Marten Bressel, a portfolio manager and rates trader at FIM partners, said the combination of events was helping to lift sentiment towards the region after a difficult couple of years.

"The ceasefire deal is one part of that and hopes are pretty high at the moment that the new government of Syria will open up the country more to the West," he said.

Lebanon has been the biggest trade for investors, though.

Its bonds have almost trebled over the last few months amid hopes that it can start addressing its dire financial woes now that nearly two years of near complete political paralysis look to be over.

Israel's markets bear the scars of the last 15 months of conflict in Gaza. The heavy cost of the fighting has seen the country's sovereign credit rating downgraded multiple times despite never having been cut before last year.