* Dispute has nationalist overtones
* UAE spoke last month of Iran's "occupation"
* Iran says UAE claims are "baseless"
(Recasts with Iranian denial)
DUBAI, Oct 9 (Reuters) - Iran's Foreign Ministry spokesmansaid on Tuesday Tehran would consider downgrading ties with theUnited Arab Emirates over three disputed Gulf islands, but statetelevision later denied the Islamic Republic was contemplatingsuch a move.
The three islands of Abu Musa and Greater and Lesser Tunbsit near oil shipping channels at the mouth of the strategicStrait of Hormuz and are claimed by both Iran and the UAE.
Iran has said its sovereignty over the three islands isnon-negotiable and Iranian Foreign Ministry spokesman RaminMehmanparast said on Tuesday Iran would consider downgradingties with the UAE if it continued to make claims.
"If the baseless anti-Iranian claims reach a point wherenational interests lie in lessening or cutting politicalrelations, this step will be taken with consultation and basedon expert analysis," Mehmanparast was quoted as saying byparliamentary news agency Icana.
"The Islamic Republic of Iran stands firm in defence of itsterritorial integrity," he said.
But Iran's state television later said that an "informedsource at the Foreign Ministry denied reports about Iran'srelations with the United Arab Emirates", without giving furtherdetails.
Last month, UAE Foreign Minister Sheikh Abdullah bin Zayedal-Nahayan said Iran's "occupation" of the three islands wasagainst international law.
"We hope the Iranian government will deal with thissensitive and important issue in a positive and just manner," hesaid while visiting New York for the United Nations GeneralAssembly, according to UAE state news agency WAM.
The 41-year-old dispute between Shi'ite Iran and the SunniUAE has nationalist and ethnic overtones and has been inflamedin recent months after Iranian President Mahmoud Ahmadinejadvisited Abu Musa in April.
In response, the UAE recalled its ambassador from Tehran forconsultations, calling the visit a "flagrant violation" of itssovereignty.
(Reporting By Yeganeh Torbati and Zahra Hosseinian, Editing byDiana Abdallah)
Keywords: IRAN UAE/