He nationalized the canal so that the fees could be used to build the Aswan Dam. The US, Britain, and the World Bank had agreed to help finance the dam, but they reneged on that agreement, and Nasser was forced to find funding from other sources. He envisioned the Aswan dam as being a key element in his plans to industrialize Egypt, so for him and for his vision of what was best for Egypt, nationalizing the canal was a necessity.

On the subject of the Strait of Tiran, this excerpt is in reference to 1967, but it is equally applicable to 1956 (it also provides plenty of documentation from original sources proving that the official Israeli version of events in 1967 is a huge lie)...

Blockading the Straits of Tiran: a reasonable casus belli?

Nasser’s action frankly pales utterly in comparison with previous Israeli shows of strength. Nor was his blockade of Tiran “an attempt at strangulation,” as Abba Eban described it. (Philo & Berry, p. 30) As David Hirst notes,

“Economically, the closure of the Straits of Tiran to all Israeli ships, and ships of other nations bound for Eilat with strategic materials, would have had little immediate impact. Only 5 per cent of Israel’s foreign trade went through Eilat; oil from Iran was the main strategic material, but Israel could easily get that through Haifa.”

Furthermore,

“What damage the closure might have done would have been offset by President Johnson’s reported offer – designed to stay Israel’s hand – to maintain its economic viability.” (Hirst, p. 333)

Indeed, according to the UN Secretariat, “not a single Israeli-flagged vessel had used the port of Eilat in the previous two and a half years.” (Finkelstein, p. 139)

Nor was there any legal issue. The Israelis’ claim to right of passage through the Straits (which the Egyptians insisted fell inside their own territorial waters) was “based on possession of a thin sliver of coastline,” as Hirst notes, “and this itself had been secured, on the Israelis’ own admission, by ‘one of those calculated violations [of the ceasefire] which we had to carefully weigh against the political risks’. That was in 1949 … when, in defiance of a UN-sponsored ceasefire, an Israeli patrol thrust southward to the Arab hamlet and police post of Um Rashrash, expelling its inhabitants and founding the port of Eilat in its place.”

http://www.arabmediawatch.com/amw/CountryBackgrounds/Palestine/MediaMyths/TheArabsStartedthe1967War/tabid/248/Default.aspx


I've had a lot of difficulty finding information about Nasser's reasons for closing the strait. A couple of references said that it was a response to Israel taking a threatening posture towards Syria (both in '56 and in '67). I also get a sense from some sources that it was a sovereignty issue. Nasser felt that he had a right to control those waters because they were in Egypt, and in '67 he said that if Israel felt it had a right to use those waters, it should take the matter up with the World Court and let them adjudicate it (Israel declined to do so - possibly because they knew they didn't really have a case). That reference is here.


More myth-busting info on the subject...

http://users.ox.ac.uk/~ssfc0005/The%20Protocol%20of%20Sevres%201956%20Anatomy%20of%20a%20War%20Plot.html

http://www.salon.com/opinion/feature/2007/06/04/six_day_war/index.html?source=search&aim=/opinion/feature