On show at an annual military parade were thousands of troops and a range of hardware including six of Iran's Shahab-3 ballistic missiles -- which sported banners saying "Death to America", "We will crush America under our feet" and "Israel must be wiped off the face of the earth".

The slogans prompted a diplomatic protest by European military attaches.

The event marked the start of "Sacred Defence Week" -- the anniversary of the outbreak of a destructive eight-year war with Iraq in 1980 -- and began with another tough speech by hardline President Mahmoud Ahmadinejad.

"Our enemies have understood that we are very serious in defending our security," said Ahmadinejad, himself a veteran of the Iran-Iraq war. The term "enemies" is used as a reference to the United States and Israel.

"Our nation wants peace, stability, justice and equality in international relations. We have always sought friendly relations with other countries. Our nation wants the well-being of other countries and will not do anything against their national interest," he insisted.

"We want the Persian Gulf to be a gulf of friendship and equality," Ahmadinejad said in a speech at the parade, being staged in the south of the capital near the shrine of Iran's late Islamic revolutionary leader Ayatollah Ruhollah Khomeini and carried live on state television.

But he warned that "if some want to again test what they have tested before, the flame of the Iranian nation will be very destructive and fiery."

"Relying on our nation and armed forces, we will make the aggressor regret its actions," Ahmadinejad warned, telling Iran's army to "prepare their defensive readiness" and calling for an "expansion of the defence industries and the utilisation of the latest technology".

A commentary accompanying the parade described the Shahab-3 as "the symbol of our strength and of the authority of Iran" as the missiles rolled past Ahmadinejad on launchers.

But the vitriolic anti-US and Israeli slogans on the missiles prompted the only EU diplomats present -- military attaches from the embassies of France, Italy, Greece and Poland -- to walk away in protest.

"There was a common position among EU members that, if the military parade included any slogans that attacked our allies, we would leave," said a diplomat.

The Shahab-3 is believed to be based on a North Korean design and thought to have a range of at least 2,000 kilometres (1,280 miles) -- meaning arch-enemy Israel and US bases in the region are well within range.

Iran says its missiles will only be tipped with conventional warheads.

The parade, hosted by the elite Revolutionary Guards, coincided with diplomatic drama at the International Atomic Energy Agency (IAEA) in Vienna, where the United States and European Union have been pushing for Iran to be referred to the UN Security Council.

Tensions worsened in August when Iran rejected demands from Britain, France, Germany that it abandon its enrichment programme in exchange for incentives. Iran also ended a freeze on enrichment-related work by resuming uranium conversion.

Conversion is the first step in making enriched uranium, which can be fuel for nuclear power reactors or the raw material for atom bombs.

The country insists its fuel cycle ambitions are strictly peaceful and a right as a signatory of the nuclear Non-Proliferation Treaty (NPT).

But in what is likely to be greeted with relief in Tehran, the EU backed off from its attempt to have Iran immediately hauled before the Security Council -- a move opposed by Russia, China and non-aligned nations which fear an escalation of the crisis.

Iran had threatened to respond to a referral by limiting UN inspections and resuming ultra-sensitive uranium enrichment work itself.

"The Europeans and the Americans want to include an ultimatum or trigger mechanism for a Security Council referral in a new resolution," one nuclear negaotiator, Javad Vaaedi, told Iranian media in Vienna.

"Iran will react and cease application of the additional protocol" to the NPT that gives the IAEA reinforced inspection powers, he said.

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