SANAA (Reuters) - Yemen's powerful ex-president Ali Abdullah Saleh, a key ally of the country's dominant Houthi movement, on Friday welcomed a U.N. peace proposal to end the country's 19-month war as a "good basis for negotiations".

Saleh made his comments as U.N. envoy Ismail Ould Cheickh Ahmed held meetings in the capital Sanaa with Houthi rebels and negotiators representing forces loyal to him.

A Saudi-led coalition has been fighting since March 2015 against Houthi rebels and Saleh loyalists, who hold much of the north of Yemen including the capital Sanaa, to try to restore the internationally recognized President Abd-Rabbu Mansour Hadi to power.

Saleh issued his comments on his official Twitter account.

Last week, Hadi rejected the U.N. plan, which would sideline him and set up a government of less divisive figures.

Still, a senior diplomat at the United Nations told Reuters that Saudi Arabia appeared broadly to accept the initiative and had encouraged Hadi to deal with it.

The ongoing conflict in Yemen has killed at least 10,000 people and unleashed one of the world's worst humanitarian crises.

(Reporting By Mohammed Ghobari; Writing By Maha El Dahan; Editing by Tom Heneghan)