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Iran announced the successful test-launch yesterday of an "advanced technology" missile capable of hitting Israel and US bases in the Gulf.

In a move that some analysts saw as a response to the meeting on Monday between US President Barack Obama and Israeli Prime Minister Benjamin Netanyahu, Iranian President Mahmoud Ahmadinejad said the Sejil 2 missile had "landed exactly on the target".

The launch, which Mr Ahmadinejad said had taken place earlier in the day, may also have been timed to coincide with the official start of campaigning for the 12 June election.

The President faces challenges by critics of his stridently anti-Israel and anti-Western rhetoric. At a rally in the northern Selman province, where the official Iranian news agency IRNA said the launch had taken place, Mr Ahmadinejad said Iran had the power to "send to hell" any military base from which "a bullet" was fired against the country. State television showed footage of a missile soaring into the sky, followed by a vapour trail.

Reuters quoted an anonymous US defence official confirming the launch of the missile, which has a range close to 1,200 miles, but he said the Pentagon had yet not been able to analyse the data needed to establish the missile's trajectory and target. A Sejil 2 was tested last November. Iran said at the time it was part of a new generation of surface-to-surface missiles.

In a bellicose reference to Israel, Mr Ahmadinejad said: "The Zionist regime ... threatens Iran militarily with its false threats and the Iranian nation should know that it is just theatre."

Danny Ayalon, Israel's deputy Foreign Minister, said Iranian missiles could reach Europe as well as Israel: "If anyone had any doubt, now it's clear to all that Iran is playing with fire."

Andrew Brookes, from the International Institute of Strategic Studies in London, said the launch seemed to be a response to the Obama-Netanyahu meeting.

"Every time they do it, it is in response to a particular event."

He said the missiles were "perfectly good enough to go and cause a problem to Israel" or elsewhere in the region.

Mr Netanyahu, who has not ruled out a unilateral military strike on Iran, pressed his concerns over its nuclear programme at Monday's meeting.

For his part, Mr Obama indicated that it would be clear by the "end of the year" whether his efforts at persuading Iran through dialogue to halt work on nuclear weapons were bearing fruit.

Italy's Foreign Minister, Franco Frattini, yesterday cancelled a trip to Iran after the regime demanded he meet Mr Ahmadinejad in the province where the launch took place.

Meanwhile, in one of two apparent new Israeli government responses to Mr Obama's desire to advance a comprehensive regional peace in the Middle East, Mr Netanyahu said he was prepared "immediately" to open talks with Syria, as well as the Palestinians.

Mr Netanyahu, who has said he will not give up the Golan Heights, had seemed cool towards a re-opening of the talks with Damascus started by his predecessor, Ehud Olmert.

But he said of his meeting with the US President: "I said I was ready to immediately open peace talks with the Palestinians, by the way, with the Syrians as well, of course, without preconditions".

The Defence Minister, Ehud Barak, was reported by Haaretz as warning settler leaders that illegal settlement outposts in the West Bank would be removed by force if not through "understanding."

He said this would not be because of renewed demands by the US but because "we can't compromise on law enforcement."