Iran's supreme leader said Sunday he would rather see talks with world powers over Tehran's nuclear programme fail than reach a "bad deal", as both sides spoke out against extending the negotiations.

Ayatollah Ali Khamenei's comments came as US Secretary of State John Kerry met Iranian counterpart Mohammad Javad Zarif in Germany to ratchet up efforts for a lasting nuclear accord.

"I agree with a deal that can take place but I do not agree with a bad deal," the Iranian leader said, according to the Khamenei.ir website.

"The Americans keep reiterating that it's better to have no deal than a bad one. I fully agree with that," he said.

"It's better to have no agreement than one that goes against our national interests."

Iran is locked in negotiations with the P5+1 powers -- Britain, China, France, Russia and the United States, plus Germany -- aimed at a deal to resolve a long-running dispute over its nuclear programme.

Tehran denies ever seeking atomic weapons but western powers are unconvinced its activities have been solely aimed at peaceful energy production.

Under an interim deal, Iran's stock of fissile material has been diluted from 20 percent enriched uranium to five percent in exchange for limited sanctions relief.

But scepticism is mounting about whether a permanent agreement is possible, after two deadlines for a comprehensive deal were missed.

Kerry and Zarif met for about 90 minutes on Sunday on the sidelines of a security conference in Munich, and both voiced their opposition to a further extension to the current March 31 cutoff.

"I do not think another extension is in the interest of anyone, as I do not believe this extension was either necessary or useful," Zarif told conference delegates.

"In my view extension is not useful, not conducive to an agreement, and all my energy and focus and that of my colleagues and I'm sure my negotiating partners... are all focused on reaching an agreement as early as possible."

- 'Impossible to extend' -

The March 31 deadline is for a political consensus, which would be followed by a final deal setting out all the technical points of what would be a complex accord by June 30.

Negotiations have been complicated by hardliners both in Iran and the United States, with US lawmakers threatening to impose new sanctions on Tehran.

Iranian members of parliament have in response agreed to study a law calling for a full resumption of nuclear activity, including restarting enrichment, in the event of fresh economic measures.

Israeli Prime Minister Benjamin Netanyahu also heaped on pressure, telling his cabinet Sunday that "world powers and Iran are galloping towards an agreement which will allow Iran to arm itself with nuclear weapons, something which will endanger the existence of Israel".

Netanyahu is set to address the US Congress on Iran's nuclear efforts next month, and experts have warned renewed American sanctions would sound the death knell for any deal.

Kerry said extending talks until June would be redundant unless basic agreements were in place by the end of March.

"If we're not able to make the fundamental decisions that have to be made over the course of the next weeks, literally, I think it would be impossible to extend," he said in an interview on NBC's "Meet the Press" taped Saturday.

"I don't think we would want to extend at that point. Either you make the decisions to prove your programme is a peaceful one, or if you're unable to do that, it may tell a story that none of us want to hear."

Iran FM says nuclear talks extension not in anyone's 'interest'
Munich, Germany (AFP) Feb 8, 2015 - Iranian Foreign Minister Mohammad Javad Zarif Sunday appeared to rule out any new extension to tough negotiations with world powers over his country's suspect nuclear programme, as he met top US diplomat John Kerry for new talks.

"I do not think another extension is in the interest of anyone, as I do not believe this extension was either necessary or useful," Zarif told a global security conference, meeting in the southern German city of Munich.

"In my view extension is not useful, not conducive to an agreement, and all my energy and focus and that of my colleagues and I'm sure my negotiating partners .... are all focused on reaching an agreement as early as possible."

Kerry and Zarif held a second round of talks here Sunday, meeting for about 90 minutes as they try to hammer out a political accord to rein in Iran's atomic ambitions ahead of a March 31 deadline. Kerry was due to fly back to Washington later in the day.

Few details of the tough negotiations have leaked, but world powers are trying to ensure that Iran's pathways to developing a nuclear weapon are cut, in return for a gradual easing of international sanctions which have crippled Iran's economy.

Zarif refused to publicly discuss the details of the negotiations for an accord, but said "we are engaged in a very serious discussion."

"We believe it is in our interest to show the world that our programme is exclusively peaceful."

But he also said: "I don't think if we don't have an agreement it will be the end of the world. We try, we fail."

He took issue with the idea of a gradual phasing out of the sanctions, saying there was nothing in the November 2013 interim accord saying that the punishing measures would be removed in a step-by-step process.

- Israel again warns against deal -

The Islamic Republic has long denied accusations that it is seeking to develop an atomic bomb, arguing that its nuclear programme is solely for its civilian energy needs.

But scepticism is mounting about whether a deal is possible, after two deadlines for a comprehensive agreement were missed.

Iran and the group known as the P5+1 -- Britain, China, France, Germany, Russia and the United States -- now want to conclude a political agreement by late March, with a final deadline pinning down the technical details by the end of June.

Kerry and Zarif have met many times, mostly in European cities, as they seek to thrash out the complex deal. But both men are under pressure from hardliners back home, with US lawmakers threatening to try to unleash a new wave of sanctions on Iran after March.

Israeli Prime Minister Benjamin Netanyahu also heaped on Pressure, telling his cabinet Sunday that "world powers and Iran are galloping towards an agreement which will allow Iran to arm itself with nuclear weapons, something which will endanger the existence of Israel," according to a statement from his office.

"We will continue to act and lead international efforts against Iran arming itself with nuclear weapons, we will do everything and we will act however possible to foil this bad and dangerous agreement which will put a black cloud over the future and the security of Israel."

Meanwhile, Zarif agreed there was a "huge deal of mistrust in Iran vis-a-vis the West and the United States in particular", arguing that Iranians were right to be sceptical about American intentions given the three-decades freeze in diplomatic ties.