French firm 'quits Iran gas deal'

William Burns, the top official handling Iranian issues at the US state department, said the launch was "very disturbing, provocative and reckless".

But US officials played down suggestions that the move had brought military confrontation with Iran any closer.

"The reality is there is a lot of signalling going on, but everybody recognises what the consequences of any kind of a conflict would be," said Defense Secretary Robert Gates.

In recent weeks, the US has stepped up the pressure to impose tougher sanctions on Iran and companies that do business with it.

The FT reported that Total was the last major western energy group considering making a significant investment to develop Iran's huge natural gas reserves.