Iran steps up nuclear operations

Iran has begun loading domestically made nuclear fuel rods into its research reactor in a defiant response to toughening Western sanctions over its controversial nuclear programme.

The official IRNA news agency said president Mahmoud Ahmadinejad inserted the first rod into the reactor in northern Tehran, and state TV broadcast live images from the ceremony with Iranian nuclear experts briefing him on the process.

Iran touted the development as an incremental step in the country's efforts to master the complete nuclear fuel cycle, despite Western penalties and UN sanctions.

The West suspects Iran's nuclear programme is aimed at producing atomic weapons, a charge Tehran denies, insisting it is for peaceful purposes.

The development came as Iran said it had cut oil exports to six European countries - the Netherlands, Spain, Italy, France, Greece and Portugal - in response to recent new European Union sanctions.

The move comes days after Iran's oil minister Rostam Qassemi said Tehran could cut off oil exports to "hostile" European nations as tensions rose over suggestions that military strikes are an increasing possibility if sanctions fail to rein in the Islamic Republic's nuclear ambitions.

Iran argues that the EU oil embargo will not cripple its economy, claiming that the country already has identified new customers to replace the loss in European sales that account for about 18% of Iran's exports. Members of Iran's parliament have been discussing a draft bill, although not finalised, which would cut off the flow to the European Union before the latest EU sanctions on Iran go into effect this summer.

Iran has said it is forced to manufacture nuclear fuel rods, which provide fuel for reactors, on its own since international sanctions ban it from buying them on foreign markets. In January, Iran said it had produced its first such fuel rod.

Iran's unchecked pursuit of the nuclear programme scuttled negotiations a year ago but Iranian officials last month proposed a return to the talks with the five permanent UN Security Council members plus Germany.

In the past, Iran has angered Western officials by appearing to buy time through opening talks and weighing proposals even while pressing ahead with the nuclear programme.

Apart from the EU's recent measures on Iran, which include an oil embargo and a freeze of the country's central bank assets, the US also recently levied new penalties aimed at limiting Iran's ability to sell oil - which accounts for 80% of its foreign revenue.

Israel is worried Iran could be on the brink of an atomic bomb and many Israeli officials believe sanctions only give Tehran time to move its nuclear programme underground, out of reach of Israeli military strikes.