Updated 12:29 PM EST
TEHRAN, Iran - Iran won't retreat "one iota" from its nuclear program but the world is being misled by claims that it seeks atomic weapons, President Mahmoud Ahmadinejad said Wednesday in his first reaction since a U.N. watchdog report that Tehran is on the brink of developing a warhead.
Ahmadinejad strongly chided the U.N. International Atomic Energy Agency, saying it is discrediting itself by siding with "absurd" U.S. accusations.
"This nation won't retreat one iota from the path it is going," Ahmadinejad told thousands of people in Shahr-e-Kord in central Iran. "Why are you ruining the prestige of the (U.N. nuclear) agency for absurd U.S. claims?"
The 13-page annex to the IAEA's report released Tuesday included claims that while some of Iran's activities have civilian as well as military applications, others are "."
Among these were indications that Iran has conducted high explosives testing and detonator development to set off a nuclear charge, as well as computer modeling of a core of a nuclear warhead. The report also cited preparatory work for a nuclear weapons test, and development of a nuclear payload for Iran's Shahab 3 intermediate range missile -- a weapon that can reach Israel.
Ahmadinejad repeated Iran's claims that it doesn't make sense to build nuclear weapons in a world already awash in atomic arms.
"The Iranian nation is wise. It won't build two bombs against 20,000 (nuclear) bombs you have," he said in comments apparently directed at the West and others. "But it builds something you can't respond to: Ethics, decency, monotheism and justice," he added in a his speech, which was broadcast live on state TV.
The U.S. and allies claim a nuclear-armed Iran could touch off a nuclear arms race among rival states, including Saudi Arabia, and directly threaten Israel. The West is seeking to use the report as leverage to possible tougher sanctions on Iran, but Israel and others have said military options have not been ruled out.
"The report is the strongest compilation yet of data that indicates that Iran may be closer to developing nuclear weapons than previously thought," said CBS News Foreign Affairs Analyst Pamela Falk, from the U.N.
Israeli Prime Minister Benjamin Netanyahu's office said the IAEA report confirmed long-standing claims by Israel and Western countries that Iran is developing nuclear bombs.
"The significance of the report is that the international community must bring about the cessation of Iran's pursuit of nuclear weapons, which endanger the peace of the world and of the Middle East," the statement said.
Until its statement late Wednesday, Israel had been largely silent over the report, wanting to portray the issue as a global concern, not a dispute between two enemies. Israel sees Iran as an existential threat, citing the nuclear program, Ahmadinejad's calls for Israel's destruction and Iran's support for Arab militant groups.
Israeli officials are hopeful the international community will pass tough new sanctions that cripple Iran's key energy sector or target its central bank, which would hinder its ability to conduct international trade.
In an interview with Israel Radio on Tuesday, ahead of the report's release, Defense Minister Ehud Barak said that without effective sanctions, Israel would not take any option "off the table," a reference to possible military action.The bulk of the information in the IAEA report was a compilation of alleged findings that have already been partially revealed by the agency. But some of the information was new -- including evidence of a large metal chamber at a military site for nuclear-related explosives testing. Iran has dismissed that, saying they were merely metal toilet stalls.
"The next step is to see if the nuclear watchdog agency's Board of Directors refers the case of Iran to the U.N. Security Council on November 17, when it meets, although Security Council action is unlikely, because of resistance from Russia and China," Falk added.
The U.N. Security Council has passed four sets of damaging sanctions on Iran, but veto-wielding members China and Russia oppose further measures and are unlikely to change their minds despite the report's findings.
Russia, which has veto-wielding power on the U.N. Security Council, said new sanctions would be unacceptable.
"Any additional sanctions against Iran would be perceived by the international community as an instrument for regime change in Tehran," deputy Foreign Minister Gennady Gatilov told the Interfax news agency, adding that Russia "does not intend to consider such proposals."
Gatilov said Russia believes that dialogue with Iran is the only way forward.
Meanwhile, Iran's other chief ally, China, issued cautious statements calling for diplomacy and dialogue.
In Paris, Foreign Minister Alain Juppe said France would support boosting sanctions against Tehran to an "unprecedented scale" if Iran stonewalls investigations, even as Israel and others say that military options are still possible.
"We cannot accept this situation (of a nuclear-armed Iran), which would be a threat to stability and peace of the region and beyond," he said on France's RFI radio.
Falk reported that because Iran is fearful of a military response by the U.S. or Israel, it has dispatched its nuclear envoys to dispute each of the allegations in the report. "The Obama administration has clarified that sanctions are the next likely step, with the hope that this report will not provoke an outright military confrontation," she said.