However in the first news conference since his election victory sent shockwaves around the world, the ultra-conservative Ahmadinejad also said that Iran "did not really need" relations with arch-enemy the United States.

Foreign governments had expressed concern over the election of the deeply religious Tehran mayor, particularly over Iran's nuclear programme, and Ahmadinejad was at pains to present a conciliatory face to the world.

"Moderation will be the main policy of the government of 70 million people. There will be no place for extremism," he told hundreds of reporters packed into Tehran's town hall.

"This government will be a government of friendship and compassion. This government will be a government of justice and fairness, in the service of the people... whatever views they have."

But the 49-year-old president-elect said Iran does "not really need" to restore relations with the United States, which were broken off after the Islamic revolution a quarter of a century ago.

"Iran is on a path of progress and elevation, and does not really need the United States on this path," he said, but added: "We can work with any country in the world that does not show animosity to Iran."

A possible resumption of dialogue was floated by his defeated rival, the moderate conservative Akbar Hashemi Rafsanjani, a senior cleric and former president.

In the most stunning political upset in Iranian history, Ahmadinejad trounced Rafsanjani, a veteran of Iran's theocracy, in Friday's second-round run-off with 61.69 percent of the vote -- effectively slamming the door on any immediate moves for a rapprochement with Washington.

Ahmadinejad also moved to make reassuring noises about Iran's nuclear policy. The country is suspected of using an atomic energy drive as a cover for weapons development.

"Today we can say that nuclear technology is our right, to be used for peaceful purposes," he said.

He pledged that negotiations with Britain, France and Germany aimed at showing that Iran's nuclear programme is peaceful would continue, but he also called on Europe to prove its cooperation.

"Based on the national interests of the Islamic republic of Iran, we will continue negotiations. But trust must be mutual," he said. He said his foreign policy would be marked by "justice... cooperation and mutual understanding".

European leaders urged Ahmadinejad, who takes power in August, to move quickly and prove that Iran's nuclear programme was peaceful. But the Iranian foreign ministry instead replied the election would strengthen its position in negotiations.

The president-elect -- who takes over from outgoing reformist President Mohammad Khatami in August -- also sought reassure investors in Iran's fledgling stock market, which he said would grow stronger under his rule.

"It will grow bigger with more clarification so that people put their assets with trust into the bourse market."

Ahmadinejad would try to increase both foreign and domestic investment in the Islamic republic by getting rid of red tape.

"We will expand domestic and foreign investment in Iran. There are many bureaucratic barriers which have reduced investment security in Iran," he said. "I will ask foreign and domestic investors to come, especially Iranians abroad."

He reaffirmed that the new government would seek to give priority to domestic firms in the awarding of oil contracts in the OPEC cartel's number-two producer and exporter.

A deeply religious conservative, Ahmadinejad paid homage at the shrine of Iran's revolutionary leader Ayatollah Ruhollah Khomeini as one of his first acts since being elected.

Although he will be the first non-cleric to hold the presidency for 21 years, opponents have accused him of seeking to impose hardline religious puritanism on Iran and enforce strict dress codes and segregation for women.

The mayor's team has vehemently denied he is an extremist.

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