* IAEA says Iran denial "consistent with our observations"
* U.N. inspectors regularly visit Iranian nuclear sites
* Iran denies Western allegations of nuclear weapon aims (Adds detail, background)
By Fredrik Dahl
VIENNA, Jan 29 (Reuters) - The U.N. atomic watchdog made clear on Tuesday it had seen no sign of any explosion at one of Iran's most sensitive nuclear plants, backing up Tehran's denial of media reports that such an incident had taken place last week.
The International Atomic Energy Agency (IAEA), in an unusual move, made a brief statement after some Israeli and Western media at the weekend reported there had been significant damage at the underground Fordow uranium enrichment facility.
The site is at the centre of Israeli and Western concerns about Iran's nuclear programme as the Islamic state refines uranium there to a fissile concentration that takes it closer to potential atom bomb material. Iran denies any such aim.
IAEA inspectors regularly visit Iranian nuclear sites, including the one at Fordow, and the U.N. agency suggested in its comment thatthey had been at the facility after the reports of an explosion there.
"We understand that Iran has denied that there has been an incident at Fordow. This is consistent with our observations," IAEA spokeswoman Gill Tudor said in an emailed statement in response to a question.
The United States said on Monday it did not believe the reports of an explosion at Fordow, which is buried deep underground to protect it against any enemy attacks.
Iran described the news stories as Western propaganda designed to influence upcoming nuclear negotiations.
Wrangling over dates and location have delayed resumption of talks between global powers and Iran aimed at reaching a diplomatic settlement to the decade-old dispute over Tehran's nuclear programme and avert the threat of a Middle East war.
In late 2011, the plant at Fordow began producing uranium enriched to 20 percent fissile purity, compared with the 3.5 percent level needed for nuclear energy plants.
This higher level of enrichment represents a significant step towards the fissile concentration that would be needed in any attempt to build atomic bombs.
Iran says its nuclear programme is entirely peaceful and aimed at producing electricity. It says it needs 20 percent uranium to fuel a medical research reactor in Tehran.
Several U.N. Security Council resolutions have ordered Iran to suspend all uranium enrichment. The Islamic Republic says it is its "right" under the nuclear Non-Proliferation Treaty to refine uranium to produce reactor fuel.
Iran has accused Israel and the United States of trying to sabotage its nuclear programme through cyber attacks and the assassination of its nuclear scientists. Washington has denied any role in the killings, while Israel has declined to comment.
No government has taken responsibility for the Stuxnet computer virus that destroyed centrifuges at Iran's Natanz uranium enrichment facility in 2010, but it has been widely reported to have been a U.S.-Israeli project.
Israel, believed to be the Middle East's only nuclear-armed state, has hinted at possible military action against Iran if sanctions and diplomacy fail to resolve the nuclear stand-off. (Reporting by Fredrik Dahl; Editing by Andrew Heavens)