Italy's prime minister looked to restore his country's economic clout in Iran Tuesday as he became the highest-ranking European leader to visit Tehran since its nuclear deal with world powers.

Accompanied by a 250-member delegation, Matteo Renzi began a two-day trip aimed at rebuilding ties that before sanctions had seen Italy ranked as the Islamic republic's top European trading partner.

A deal to build two high-speed rail lines was among projects announced.

After an official welcoming ceremony, Renzi held talks with President Hassan Rouhani, who visited Rome in January days after sanctions were lifted under the nuclear accord.

"Italy has a special place among Iranians. Its companies and its industry are appreciated here," Rouhani said at a joint press conference after signing provisional agreements on energy, tourism and infrastructure.

"Italy is at the forefront among EU countries wanting to develop relations with Iran," he added.

Iran's supreme leader Ayatollah Ali Khamenei, who met Renzi, said he was in favour of "developing relations with Italy, particularly in economic terms".

"Some European governments and companies come to Iran to negotiate, but the results of these discussions aren't tangible," he was quoted as saying by the IRNA news agency.

Annual trade between Iran and Italy -- a member of the G7 group of leading industrialised nations -- once peaked at about $8 billion (seven billion euros).

A decade of nuclear-related sanctions has seen the figure plummet to $1.8 billion.

When Rouhani visited Rome, the two countries agreed initial terms on long-term contracts that could be valued as high as $19.4 billion, including deals in the oil, transport and shipping sectors.

Iran has said it wants European help to modernise and expand its rail, road and air networks, as well as seeking investment to boost its manufacturing base, notably in the automobile industry. All were severely damaged by sanctions.

Tuesday's rail agreement between Italy's state railways and its Iranian counterpart will see a new line built between Tehran and Hamedan, in the northwest of the Islamic republic.

A second line between Qom, south of Tehran, to Arak in the north will also be constructed. No details on the value of the agreement or the date of completion were immediately given.

- Charm offensive -

When Rouhani was in Rome he talked of rebuilding a relationship between "two superpowers of beauty and culture" that dates back to the days of the ancient Roman and Persian empires.

Renzi has spoken of plans for cultural and academic exchanges.

Rouhani's visit to Rome, however, also prompted criticism that Renzi's government was going too far in its efforts to charm Iran's theocratic rulers.

It emerged just after Rouhani had left Italy that ancient nude statues in the capital's City Hall had been covered up by wooden boxes to spare the Iranian president any possible embarrassment.

The diplomatic niceties also extended to ensuring that no alcohol was served at any of the official meals during Rouhani's stay -- a gesture France was not prepared to make, meaning plans for a state banquet had to be scrapped in Paris.

The rapprochement has been possible because of the nuclear deal which Iran and six powers -- Britain, China, France, Russia and the United States plus Germany -- struck last July after more than two years of negotiations.

The accord was implemented in January with sanctions being lifted in exchange for curbs lasting at least a decade on the Islamic republic's nuclear programme.

Iran has always denied Western allegations that it sought to develop an atomic bomb, insisting that its atomic activities are for peaceful energy development and medical research purposes.