By Katya Golubkova and Ramin Mostafavi

BUSHEHR, Iran, Aug 21 (Reuters) - Iran began loading fuel
into its first nuclear power plant on Saturday, a potent symbol
of its growing regional sway and its rejection of international
sanctions designed to prevent it building a nuclear bomb.

Television showed live pictures of Iran's nuclear chief Ali
Akbar Salehi and his Russian counterpart watching a fuel rod
assembly being prepared for insertion into the reactor near the
Gulf city of Bushehr.

"Despite all the pressures, sanctions and hardships imposed
by Western nations, we are now witnessing the start-up of the
largest symbol of Iran's peaceful nuclear activities," Salehi
told a news conference.

Russia designed and built the plant and will supply fuel. To
ease nuclear proliferation concerns, it will take back spent
rods that could be used to make weapons-grade plutonium.

Washington has criticised Moscow for pushing ahead with
Bushehr despite Iranian defiance over its nuclear programme.

But U.S. State Department spokesman Darby Holladay said
Washington did not view the reactor as a proliferation risk,
partly because of Russia's role in providing fuel and taking
back spent rods.

"Russia's support for Bushehr underscores that Iran does
not need an indigenous enrichment capability if its intentions
are purely peaceful," Holladay said.

Moscow supported a U.N. Security Council resolution in June
that imposed a fourth round of sanctions because of fears,
backed by the International Atomic Energy Agency, that Iran's
uranium enrichment programme is aimed at developing nuclear
arms.

President Mahmoud Ahmadinejad chose Saturday to tell a
meeting of university professors of plans to shoot satellites to
altitudes of 700 km, then 1,000 km -- certain to add to Western
concerns about Iran's development of missile technology.

"Once this target is realised, placing a satellite at a
geosynchronous orbit of 35,000 km will be easy," he was quoted
as saying by ISNA news agency. "This will be done within the
next two or three years."

Long-range ballistic technology used to put satellites into
orbit can also be used to launch warheads.

Iran launched a domestically made satellite in 2009, but
only to an altitude of 250 km. Washington called that a
"provocative act".

HARNESSING TECHNOLOGY

The fuelling up of Bushehr is a milestone on Iran's path to
harness technology that it says will reduce consumption of its
abundant fossil fuels. It says its nuclear programme is entirely
peaceful, and aimed at allowing it to export more oil and gas
and prepare for the day when mineral riches dry up.

Iran's arch-enemy Israel, widely assumed to be the only
Middle East country to have nuclear weapons, has said a
nuclear-armed Iran would be a threat to its existence, and was
quick to criticise Tehran over Bushehr.

"It is totally unacceptable that a country that so blatantly
violates (international treaties) should enjoy the fruits of
using nuclear energy," Israeli Foreign Ministry spokesman Yossi
Levy said.

Israel's stance has raised concerns it could attack Iran's
nuclear sites, but Ahmadinejad said any raid would be suicidal.

"Even the most foolish politicians know that aggression
against Iran would be suicidal. They know if anyone should want
to attack Iran the confines of our reaction would not be limited
to any specific area and that the entire world would be the
battlefield," he told the semi-official Fars news agency.

Iranian officials said it would take two to three months for
Bushehr to start producing power, and that it would generate
1,000 megawatts, about 2.5 percent of Iran's electricity usage.

Bushehr was begun by Germany's Siemens in the 1970s, before
Iran's Islamic Revolution, but has been dogged by delays.

"The construction of the nuclear plant at Bushehr is a clear
example showing that any country, if it abides by existing
international legislation and provides effective, open
interaction with the IAEA should have the opportunity to access
peaceful use of the atom," Sergei Kiriyenko, head of the Russian
state nuclear corporation Rosatom, told a news conference.

The IAEA said it regularly inspected Bushehr. "The Agency is
taking the appropriate verification measures in line with its
established safeguards procedures," spokesman Ayhan Evrensel
said.

CONCERN

While most analysts say Bushehr does not add to any
proliferation risk, many countries remain concerned about Iran's
uranium enrichment.

It disclosed the existence of a second enrichment plant only
last year and announced in February it was enriching uranium to
a level of 20 percent purity, compared to about 3.5 percent
previously. This is a relatively short step from weapons-grade
levels, and well above what is needed to fuel a power plant.

Iran said it needed to enrich to that level as a deal with
major world power and the IAEA to supply special fuel for a
medical reactor in Tehran had fallen apart.
(Writing by Robin Pomeroy; Additional reporting by Hossein
Jaseb; Editing by Kevin Liffey)