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TEHRAN — President Mahmoud Ahmadinejad demanded on Thursday that world powers respect Iran and release its assets if they want to engage with Tehran, in an apparent reference to archfoe the United States.

"If our nation sees they have changed their behaviour, dropped their arrogant attitude ... and return Iranian nation's rights and assets the nation will accept that," Ahmadinejad said in a televised speech in the northern city of Tabriz.

"But if they are again after deception and plotting in the region our nation's response will be the same as it gave to these men's predecessors," he warned.

Hardline Ahmadinejad made the comments as US President Barack Obama warned of "consequences" after Iran dismissed a UN-brokered nuclear fuel deal aimed at defusing a long-running standoff with the West over Tehran's controversial atomic programme.