Tehran starting up advanced centrifuges and producing more highly refined uranium "is a response to your malice", Rouhani said in a message aimed at the Jewish state.

"What you did was nuclear terrorism," he said, referring to a blast early Sunday that knocked out electricity at its main nuclear facility in central Iran. "What we do is legal."

Tehran's announcement of stepped-up enrichment has cast a shadow over talks in Vienna aimed at salvaging the 2015 nuclear deal between Iran and world powers that then US president Donald Trump abandoned almost three years ago.

The European parties to the accord -- Britain, France and Germany -- Wednesday expressed "grave concern" over Iran's enrichment move while rejecting "all escalatory measures by any actor".

Iran's regional rival Saudi Arabia also expressed concern and called on Tehran to "avoid escalation".

- 'No alternative' -

The UN's International Atomic Energy Agency said its inspectors visited the Natanz enrichment plant on Wednesday.

"IAEA inspectors are continuing their verification and monitoring activities in Iran, and today have been at the Natanz enrichment site," it said.

The Natanz attack unleashed a "dangerous spiral", Iran's Foreign Minister Mohammad Javad Zarif tweeted.

Zarif warned US President Joe Biden the situation could only be contained by lifting sanctions Trump imposed on Iran from 2018.

"No alternative. Not much time," he added.

Israel has neither confirmed nor denied involvement but public radio reports in the country said it was a sabotage operation by the Mossad spy agency, citing unnamed intelligence sources.

Iran's envoy to the IAEA, Kazem Gharibabadi, tweeted that preparatory steps to allow enrichment to higher purity had started and that "we expect to accumulate the product next week" from centrifuges at Natanz.

The step will bring Iran closer to the 90 percent purity threshold for military use and shorten its potential "breakout time" to build an atomic bomb -- a goal the Islamic republic denies it is seeking.

Israel has consistently vowed it will stop Iran from ever building an atomic bomb, an eventuality it regards as an existential threat.

Iran has also never minced words when it comes to the Jewish state. Supreme leader Ayatollah Ali Khamenei in 2018 reaffirmed Tehran's long-held position that Israel is "a malignant cancerous tumour" that must "be removed and eradicated".

Israel, the only country in the region believed to have nuclear weapons, is strongly opposed to Biden's efforts to revive what it regards as a flawed nuclear agreement between Iran and the UN Security Council's five permanent members plus Germany.

The accord, agreed when Biden was vice-president to Barack Obama, promised Tehran relief from punishing sanctions in return for agreeing to limits on its nuclear programme.

The United States said Tuesday it stood by its ally Israel but remained committed to the Iran talks despite Tehran's enrichment plan.

Rouhani asserted that Israel aimed to deprive Iran of its leverage during the Vienna talks, saying: "You want our hands to be empty during negotiations, but we will go there with fuller hands."

Iran opted for more advanced centrifuges and higher-level enrichment so that Israel "would understand that you cannot stop us" from using nuclear technology, he said.

- 'Very provocative' -

Rouhani also again pledged that Iran's nuclear activity would "certainly be peaceful" and remain under IAEA supervision.

Iran has said it requires the more highly enriched uranium for medical purposes. Gharibabadi said the new material "will improve significantly both the quality and quantity of radiopharmaceutical products".

Under the nuclear deal, Iran had committed to keep enrichment to 3.67 percent, though it had stepped this up to 20 percent in January.

Robert Kelley, a former IAEA director of inspections, described the leap to 60 percent as "very provocative".

Iran had greatly increased the number and performance of its centrifuges, but "there is not much evidence" it had accumulated the many other key elements for developing a nuclear bomb, he said.

Analyst Henry Rome argued that Iran's moves seek to avoid it "appearing weak as nuclear negotiations resume".

"For now, Iran is building leverage, not a bomb," said Rome, a specialist on Iran for the Washington-based Eurasia Group consultancy.

burs-amh/mj/dv/dwo