UPDATE 1-Iran denies oil market rumour of nuclear deal

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TEHRAN, July 15 (Reuters) - A senior Iranian official denied on Tuesday a rumour in the oil market, cited by some traders, that suggested Tehran had reached a deal on its disputed nuclear programme with the United States.

Oil plunged more than $9 in early trade to below $136 a barrel amid growing concerns about the economy of the world's top energy consumer, with some traders mentioning talk of an accord between Tehran and Washington.

"Such reports (on a deal) are psychological war to undermine talks (between Iran and world powers). Iran will never make a deal on its legitimate rights," the official told Reuters.

Iran frequently says it is its national right to enrich uranium, which is the part of its nuclear programme that the United States and other world powers want halted.

World powers -- the United States, Britain, France, Germany, Russia and China -- have offered a package of nuclear, trade and other incentives to coax Iran to suspend enrichment, the process the West fears Iran wants to master so it can build bombs.

Iran's chief nuclear negotiator, Saeed Jalili, and European Union foreign policy chief Javier Solana meet in Geneva on Saturday to discuss that package. But this is only a preparatory meeting not the start of formal negotiations.

The powers say Iran must first suspend enrichment before formal talks can start. But to get preliminary talks going, Iran has been asked to freeze moves to expand its nuclear work, while the U.N. Security Council would halt more sanctions measures.

However, Tehran has so far rejected the demand to suspend enrichment, a process it says it only wants for peaceful ends, and has given no indication it is ready to freeze nuclear work.

Iran, the world's fourth largest oil producer, insists its nuclear programme is aimed at developing the technology for generating electricity not making bombs. (Reporting by Parisa Hafezi, writing by Edmund Blair)