By William Maclean

DUBAI, June 7 (Reuters) - A senior United Arab Emirates (UAE) official said on Wednesday that more punitive measures on Qatar, including further curbs on business, remain on the table in a dispute with its powerful Arab neighbours.

"What we are hoping is that our action will send some sense into the decision-makers in Qatar when they will see their overall interest is in not undermining their neighbours," UAE Minister of State for Foreign Affairs Anwar Gargash told Reuters in an interview, referring to more curbs.

Saudi Arabia, Egypt, the UAE and Bahrain severed diplomatic relations with Qatar in a coordinated move on Monday, accusing it of support for Islamist militants and Iran. Qatar strongly denies supporting terrorism.

Gargash said he hoped further steps were not needed but could not be ruled out.

"We hope that cooler heads will prevail, that wiser heads will prevail and we will not get to that," he said.

"But if we have to, these are all entanglements that we have to deal with as the crisis develops and create solutions to them and this will be a very, very sad course that we need to take, but I am hoping that cooler heads will prevail in Qatar."

Gargash said Qatar must make an iron-clad commitment to change its policies before talks could begin to resolve the biggest diplomatic crisis in the Gulf region in years.

(Reporting by William Maclean, Editing by Sami Aboudi/Jeremy Gaunt) ((sylvia.westall@thomsonreuters.com; Dubai Newsroom +971 56 216 6204; Reuters Messaging: sylvia.westall.thomsonreuters.com@reuters.net))