TEHRAN - Iran's hard-line rulers sent uncompromising signals to foes at home and abroad on Wednesday, warning of possible legal action against opposition leaders and testing an upgraded missile that could reach Israel.

The United States said the launch of a Sejil 2 missile, with a reported range that would put the Jewish state and US Gulf bases within reach, undermined Iran's insistence of peaceful intentions and would be looked upon seriously by the world.

British Prime Minister Gordon Brown said it boosted the case for tougher sanctions over the oil producer's disputed nuclear programme, which the West fears is aimed at making bombs. Tehran says it only seeks to generate electricity.

"This is a matter of serious concern to the international community and it does make the case for us moving further on sanctions," Brown said in Copenhagen.

A senior Iranian energy official dismissed the latest effort to tighten the screw, saying a move by US lawmakers to target the Middle Eastern state with fuel sanctions would not cause any problems because Tehran had many gasoline suppliers.

Iran is the world's fifth-largest oil exporter but lacks enough refining capacity to meet domestic fuel needs, forcing it to import up to 40 percent of its gasoline consumption.

This makes it vulnerable to punitive measures that target the trade although Iranian officials have repeatedly shrugged off the impact of such steps.

On Tuesday, the US House of Representatives backed legislation to impose sanctions on foreign companies that help to supply fuel to Iran, a measure lawmakers hope would deter Tehran from pursuing its sensitive atomic activities.

"They cannot succeed," said Hojjatollah Ghanimifard, vice-president of investment affairs at the National Iranian Oil Company. "We have a long list of suppliers of gasoline." Iranian President Mahmoud Ahmadinejad also reiterated Tehran's position that its nuclear program had peaceful goals.

"It is true that Iranian nation has a lot of enemies, but it does not need an atomic bomb to defend itself," Ahmadinejad said in an interview with a Danish television, highlights of which were carried by the official IRNA news agency.

"Nuclear weapons could not save the Soviet Union from collapse. Iran opposes atomic weapons and supports nuclear disarmament," Ahmadinejad said.

Analysts say political turmoil in Iran since a disputed presidential election in June has further clouded prospects for any resolution of the nuclear dispute. Internal tension has increased since student backers of opposition leader Mirhossein Mousavi clashed in Tehran last week with security forces.

"PLOT" The government and official media have accused opposition supporters of insulting the memory of the Islamic Republic's revered late founder, Ayatollah Ruhollah Khomeini, by tearing up a picture of him during the demonstrations.

The opposition has denied involvement in the reported picture incident, suggesting the authorities were planning to use it as a pretext for a renewed crackdown.

Raising pressure on the reform movement, Iran's judiciary said it had evidence that opposition leaders had fomented trouble after the presidential poll, which Mousavi says was rigged in favor of Ahmadinejad.

"We have enough proof about the leaders of this plot against the system," judiciary head Sadeq Larijani said, according to IRNA.

Hard-liners have called in the past for Mousavi to be arrested for fueling unrest after the election.

However, former president Akbar Hashemi Rafsanjani, who criticized the post-election crackdown, urged the authorities to treat the public with greater respect.

"People should be treated in a way that they feel the establishment respects them and preserves their rights," Rafsanjani was quoted by state broadcaster IRIB as telling a group of clerics.

The authorities rejected opposition charges of poll fraud and portrayed the biggest anti-government protests since the 1979 revolution as a foreign-backed bid to end clerical rule.

Thousands of Mousavi supporters were detained after the vote, including senior reformers. Most have been freed but more than 80 people have received jail terms of up to 15 years and five have been sentenced to death over the post-vote unrest.

"BAD SIGNAL" Wednesday's test of a Sejil missile, which Iranian Defense Minister Ahmad Vahidi said could not be destroyed by anti-missile systems due to its high velocity and anti-radar capabilities, drew swift Western condemnation.

"Such actions will increase the seriousness and resolve of the international community to hold Iran accountable for its continued defiance of its international obligations on its nuclear program," White House spokesman Mike Hammer said.

Vahidi said the test of the Sejil 2 was aimed at boosting deterrent capabilities and posed no threat to the region.

Iran earlier this year said Sejil 2 had a range of 2,000 km (1,250 miles), enabling it to reach Israel and US bases in the region. Neither Israel nor the United States has ruled out military action if diplomacy fails to resolve the nuclear dispute. Iran has vowed to retaliate for any attack.

In October, negotiators offered a deal under which Iran would send most of its low-enriched uranium abroad for further enrichment. However, Tehran has backed away from it, raising the prospect of additional sanctions.