Iran's Supreme Leader Ayatollah Ali Khamenei said on Friday Iran would retaliate over Western oil sanctions and any threat of attack, after U.S. Defense Secretary Leon Panetta was cited as saying he feared a possible Israeli strike as early as April.

Khamenei's speech to mark the anniversary of the 1979 Islamic Revolution was the first direct response to tighter sanctions imposed by the West in recent weeks.

"Threatening Iran and attacking Iran will harm America ... Sanctions will not have any impact on our determination to continue our nuclear course ... In response to threats of oil embargo and war, we have our own threats to impose at the right time," Khamenei told worshippers in a speech broadcast live on state television.

"I have no fear of saying that we will back and help any nation or group that wants to confront and fight against the Zionist regime (Israel)."

U.S. media reports said U.S. Defense Secretary Panetta believed there was a growing possibility Israel would attack Iran as early as April.

The Washington Post first reported on Thursday that Panetta was concerned about an increased likelihood Israel would launch an attack over the next few months. CNN said it confirmed the report, citing a senior Obama administration official, who declined to be identified.

"Panetta believes there is a strong likelihood that Israel will strike Iran in April, May or June - before Iran enters what Israelis described as a 'zone of immunity' to commence building a nuclear bomb," columnist David Ignatius wrote.

"Panetta and the Pentagon both declined comment on the Post report.

"Backfire"

Khamenei said any U.S. military strike against Iran would backfire and that the painful and crippling Western sanctions would only increase the resilience of Iran.

"Americans say all options are on the table even the option of military strike (against Iran)...Any military strike is ten times more harmful for America. Such threats show that they have no sufficient discourse against Iran's logic and discourse."

"Such threats show that America has no way but using force and bloodshed to achieve its goals, which further harms America's rulers, international and domestic credibility," he added.

Khamenei said the aim of the sanctions was to punish the Islamic Republic because of Islam.

"Such sanctions will benefit us. They will make us more self-reliant ... We would not achieve military progress if sanctions were not imposed on Iran's military sector ... More imposed pressures mean more self-reliance for Iran."

"Sanctions are beneficial also because it makes us more determined not to change our nuclear course ... Iran will not change its nuclear course because of sanctions...,"he added.

Iran always points to what it calls "hypocrisy" of internationals actors over its nuclear programme it maintains peaceful, referring to nuclear-armed Israel in the same region that most experts estimate that it has at least between 100 and 200 nuclear warheads and often threatens the Islamic republic with an attack.

A top Chinese newspaper stepped up Beijing's opposition to a Western push for tighter sanctions against Iran, warning on Friday that tensions over Tehran's nuclear programme are hurting energy markets and could stifle the global economic recovery.

"China's criticism"

China's criticism appeared in the People's Daily, the mouthpiece of the ruling Communist Party. It comes a day after German Chancellor Angela Merkel urged Beijing to use its influence to persuade Iran to give up its nuclear programme.

"The global economy is in the midst of a difficult economic recovery and reducing the shocks of uncertainties is the common responsibility of countries all over the world," the People's Daily commentary said.

"In the near term, the sudden spike in tensions between the United States and Iran is now posing the greatest uncertainty. This factor is disrupting global energy markets and has cast a shadow over the global economic recovery."

China, the world's second-largest crude consumer and the biggest buyer of Iranian oil, has long opposed unilateral sanctions that target Iran's energy sector and has tried to reduce tensions that could threaten its oil supply.

Escalating tensions between Iran and the West have pushed up Brent crude prices by about 9 percent since mid-December.

On Thursday, at a joint media briefing after what Germany's Merkel described as "long discussions" about Iran, Chinese Premier Wen Jiabao appeared to reject the pressure to do more.

He said Beijing objected to Western nations politicizing the normal commercial relationship it has with the Islamic Republic, echoing language that China has used before.