Ahmadinejad was asked at the conclusion of a summit of Muslim nations here whether Iran would stop enriching uranium because of concerns from Western countries.

"Those who are nervous, there is no need for them to be nervous. They are nervous because of their arrogance, selfish and exclusivist tendencies," he told a press briefing.

"All of them know 100 percent that the nuclear program of Iran is totally peaceful ... We advise them not to become nervous. They can use this beautiful air. They can have fun," he said.

Western nations have been seeking to halt Iran's nuclear enrichment program, fearful it is using it as a cover to develop an atomic bomb, but Iran insists it is only pursuing nuclear energy for peaceful purposes.

Ahmadinejad did not refer to his foreign minister's warning earlier Saturday that Iran would only consider new European incentives aimed at finding a deal over its program if it recognised the Islamic republic's right to enrich uranium.

Europe is currently preparing a new package of trade, security and technological incentives to try to entice Tehran away from uranium enrichment and resolve the nuclear crisis peacefully.

In a development that could further intensify the crisis, diplomats said UN inspectors found traces of weapons-grade uranium in vacuum pumps at the Lavizan-Shian site in Tehran where Iran had denied carrying out such work.

Iran's foreign ministry said the latest claims were "baseless and without importance." Ahmadinejad said he had not yet heard of the report.

The leader, who was attending the Developing-8 (D-8) summit of eight Muslim nations on Indonesia's resort island of Bali, reiterated that his nation was ready to talk with any country, except Israel.

But he said if "they carry bombs over our heads and they ask us to engage in dialogue with them, we will never do that. If they want to resort to use of force, we are not going into dialogue with them."

Ahmadinejad is due to leave Indonesia on Sunday.

He made a three-day state visit to Jakarta ahead of the D-8 summit during which he won Indonesian President Susilo Bambang Yudhoyono's support for pursuing nuclear energy for peaceful purposes.

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