Sheikh Mohammed bin Rashid al-Maktoum, the prime minister of the United Arab Emirates (UAE), has held talks with Iranian leaders in Tehran.

Mohammed is the most senior UAE official to make a bilateral visit to Tehran since the Islamic revolution in 1979.

"Iran and the UAE have historical and strong relations and with my trip ... bilateral relations will rise to new horizons," the state-run Mehr news agency quoted him as saying.

Despite US pressure on countries to weaken ties with Iran,the UAE, a US ally, remains Iran's largest trading partner.

Bilateral trade is said to stand at $11.7bn in 2007, with imports from the UAE forming the bulk of the exchanges at $9.2bn.

Dubai serves as a hub for Iranian business despite a longstanding dispute between the UAE and Iran over three strategic Gulf islands.

'Positive' relations

Parviz Davoudi, Iran's first vice-president, said: "We talked about different issues including the economy and both countries emphasised the expansion of economic ties."

He also said that al-Maktoum stressed "Iran's right to peaceful nuclear activities".

The West fears Iran could use atomic technology to make an nuclear bomb but Tehran insists it only wants electricity.

Mahmoud Ahmadinejad, the president, is trying to boost Iran's relations with Arab states. Last May, he made the first visit by an Iranian leader, post-revolution, to the UAE.