Iran test-fires missile

"The army successfully test-fired a top speed long-range sub-to-surface missile off the Persian Gulf," the Army's Navy commander, Gen. Sajjad Kouchaki, said on state television.

A brief video clip showed the missile, fired from a submarine, hitting a target on the surface of the water within less than a mile.

The test came as part of large-scale military exercises under way throughout the country. Iran has routinely held war games over the past two decades to improve its combat readiness and to test equipment including missiles, tanks and armoured personnel carriers.

Earlier a Reuters report said Iran will pursue its nuclear fuel activities despite mounting international pressure to halt the disputed operations.

"Production of nuclear fuel is our strategic aim," state radio quoted chief nuclear negotiator Ali Larijani as saying Sunday.

The UN Security Council has demanded Iran suspend atomic fuel work by August 31 or face the threat of sanctions. The West accuses Iran of pursuing nuclear weapons, while Iran insists its nuclear work is meant only for generating power.

"Any measure to deprive Iran of its right will not change our mind about our aim," Larijani said.

Deputy Foreign Minister Mohammad Reza Baqheri reiterated that Iran would never halt uranium enrichment.

"It is our red line. We will never do it," he told the official IRNA news agency.

The West's main concern is Iran's uranium enrichment programme, a process that can be used to make fuel for nuclear power stations or material for nuclear bombs.