By Parisa Hafezi and Fredrik Dahl
TEHRAN (Reuters) - Iran's top legislative body on Tuesday ruled out annulling a disputed presidential poll that has prompted the biggest street protests since the 1979 Islamic revolution, but said it was prepared for a partial recount.
In what appeared to be a first concession by authorities to the protest movement, the 12-man Guardian Council said it was ready to re-tally votes in the poll, in which hardline President Mahmoud Ahmadinejad was declared the runaway winner.
But the powerful Council rejected reformist calls to annul Friday's election, which set off swift-moving political turmoil, riveting attention on the world's fifth-biggest oil exporter.
And Ahmadinejad's supporters appeared to have denied the opposition the chance to keep up the momentum of mass street protests by mobilising thousands of demonstrators in central Tehran where Mirhossein Mousavi's supporters had planned to gather again.
State television said the "main agents" in post-election unrest had been arrested with explosives and guns.
U.S. President Barack Obama, who has sought to engage Iran and asked its leadership to "unclench its fist," said he was deeply troubled by the post-election violence, and that protesters who had taken to the streets had inspired the world.
Seven people were killed Monday on the fringes of a vast opposition march through the streets of central Tehran.
But authorities banned another opposition rally Tuesday and state television showed live pictures of thousands of Ahmadinejad supporters, some waving Iranian flags, gathering at the Vali-ye Asr Square before any Mousavi supporters arrived.
At the rally, a former parliamentary speaker, Gholamali Haddadadel, drew cheers by saying that Tehran, where Mousavi won the most votes, did not represent all of Iran. He added:
"I would like to tell Mr Mousavi:... Before the election was held it was not right for people close to you to say that if you see Mr Ahmadinejad victorious there has been electoral fraud."
CALL TO STAY AWAY
Mousavi urged his supporters to stay away from the square "to protect lives" and avoid confrontation with security forces and Ahmadinejad backers. They appeared to have heeded his call.
Further protests, especially if they are on the same scale as Monday's, would be a direct challenge to the authorities who have kept a tight grip on dissent since the U.S.-backed shah was overthrown in 1979 after months of demonstrations.
Discord within Iran's ruling system has never been so public. The Mousavi camp is backed by traditional establishment figures, such as former presidents Akbar Hashemi Rafsanjani and Mohammad Khatami, concerned about how Ahmadinejad's truculent foreign policy and populist economics are shaping Iran's future.
The United States and its European allies have also found Ahmadinejad implacable in asserting Iran's right to enrich uranium, a program that Iran says is purely peaceful but that they fear could be used to make an atomic bomb.
Supreme Leader Ayatollah Ali Khamenei, supposedly above the political fray, has favoured Ahmadinejad, who is also supported by the elite Revolutionary Guard and the Basij militia.
Intelligence Minister Gholamhossein Mohseni-Ejei said his ministry was chasing two types of people over the unrest.
"One wanted to achieve its goal through explosions and terror, and in this connection 50 people were arrested and more than 20 explosive consignments were discovered. They were supported from outside the country," he told state radio.
"The second category was made up of counter-revolutionary groups who had penetrated election headquarters (of the election candidates) ... Some 26 such elements have been arrested," he added. Iran often accuses Western foes of stirring instability.
FOREIGN JOURNALISTS BANNED
Illustrating Iran's sensitivity to world opinion, authorities Tuesday banned foreign journalists from leaving their offices to cover street protests.
France, Germany and Britain have led an EU campaign to persuade Iran to clarify the election results, but Iran on Tuesday summoned a Czech diplomat, representing the EU, to protest against "interventionist and insulting" EU statements.
A spokesman for the Guardian Council, which groups clerics and Islamic law experts as a constitutional watchdog, said that it was "ready to recount the disputed ballot boxes claimed by some candidates, in the presence of their representatives."
"It is possible that there may be some changes in the tally after the recount," spokesman Abbasali Kadkhodai said. "Based on the law, the demand of those candidates for the cancellation of the vote - this cannot be considered," he told state television.
In the Mousavi stronghold of northern Tehran, his supporters gathered in small groups, wearing wristbands in his green campaign colours, amid heavy traffic, residents said.
"We only want cancellation of the election result," said one of them, Ali Akbar Mohtashamipour.
There have been arrests across the country since the election protests broke out. ISNA said Tuesday that around 100 people were arrested in unrest near a university in the southern city of Shiraz.
Despite the turmoil, Ahmadinejad travelled to Russia for a summit of the Shanghai Cooperation Organisation, which includes Russia and China, where he was congratulated on his re-election.
Iran's English-language Press TV said seven people were killed and several wounded at the end of Monday's rally -- a mainly peaceful gathering attended by many tens of thousands -- when "thugs" tried to attack a military post in central Tehran.
An Iranian photographer at the scene said Islamic militiamen opened fire when people in the crowd attacked a Basij post. He said one person was killed and others wounded.
The Basij is a volunteer paramilitary militia fiercely loyal to Khamenei, who has the final say on all matters of state and replaced revolutionary leader Ayatollah Ruhollah Khomeini when he died 20 years ago.
During the past three days of violence, police have accused "bandits" of setting buses on fire, breaking windows of banks and other buildings, and damaging public property.
(Writing by Peter Millership; Editing by Kevin Liffey)
