U.S. President Barack Obama said America was prepared to extend a hand of peace to Iran if it "unclenched its fist" and that the time was ripe for Israel and the Palestinians to resume peace negotiations.

Choosing an Arab station for his first formal TV interview as president, Obama also sought to heal U.S. ties with the Arab and Muslim world, telling them "Americans are not your enemy".

During the eight-year administration of former President George W. Bush, U.S. relations with many Arab and Muslim nations were damaged by the invasions of Afghanistan and Iraq and Bush's initial reluctance to push for Israeli-Palestinian peace.

"It is impossible for us to think only in terms of the Palestinian-Israeli conflict and not think in terms of what's happening with Syria or Iran or Lebanon or Afghanistan and Pakistan," he told the Dubai-based satellite channel Al Arabiya.

"It is important for us to be willing to talk to Iran, to express very clearly where our differences are, but (also) where there are potential avenues for progress," Obama said.

"If countries like Iran are willing to unclench their fist, they will find an extended hand from us."

Iran said it awaited changes in U.S. policies towards it.

"We are waiting for the new American administration to carry out practical changes," government spokesman Gholamhossein Elham said according to the ISNA news agency. "America should accept that it is a government, not an empire."

In an echo of Obama's comments, U.S. Secretary of State Hillary Clinton signalled on Tuesday the administration's readiness to talk to Iran, saying Tehran had a "clear opportunity" to show the world it is willing to engage.

The Bush administration had pushed for new U.N. sanctions on Iran for failing to suspend a uranium enrichment programme.

The United States and Western powers suspect Iran is trying to produce nuclear arms. Iran says its plans are peaceful.

Obama, who took office on Jan. 20, quickly named former Senator George Mitchell as Middle East envoy. Mitchell arrived in Egypt on Tuesday on the first leg of a regional visit.

"Sending George Mitchell to the Middle East is fulfilling my campaign promise that we're not going to wait until the end of my administration to deal with Palestinian and Israeli peace. We're going to start now," Obama said.

"MOMENT IS RIPE"

He said his administration wanted to begin by listening and talking to those involved without prejudging their concerns.

"We cannot tell either the Israelis or the Palestinians what is best for them," he said.

"But I do believe that the moment is ripe for both sides to realise that the path that they are on is one that is not going to result in prosperity and security for their people. And that instead, it's time to return to the negotiating table."

Obama also praised Saudi King Abdullah for the Saudi-sponsored peace initiative, which offers Arab peace to Israel in exchange for its withdrawal from Arab land occupied since 1967 and a just solution for Palestinian refugees.

"I might not agree with every aspect of the proposal, but it took great courage to put forward something that is as significant as that," he said.

Obama acknowledged that the United States had made mistakes but, noting that he had lived in Muslim countries and had Muslim relatives, said he would try to restore that relationship.

"My job to the Muslim world is to communicate that the Americans are not your enemy. We sometimes make mistakes. We have not been perfect," he said.

"But ... America was not born as a colonial power, and ... the same respect and partnership that America had with the Muslim world as recently as 20 or 30 years ago, there's no reason why we can't restore that."

Saudi Foreign Minister Prince Saud al-Faisal welcomed Obama's comments to the Muslim world and commitment to Middle East peace, saying Arab states were open to U.S. views on the Saudi peace initiative.

"Arab states, which are the ones that can decide about the initiative, have no reservations against a constructive dialogue and answering any questions from the U.S. administration about it," Prince Saud was quoted as saying by state news agency SPA.

Obama urged Muslims to judge him by his actions, pointing to the decision to close the Guantanamo Bay detention centre, where detainees in the U.S. war on terror are held. He said he also would begin to implement his pledge to draw down troops in Iraq.

But while Arabs have high hopes that Obama will change U.S. policies, analysts said he had yet to spell out how he would achieve a two-state solution and manage the Iraq withdrawal.

Asked about the sharp verbal attacks on him by al Qaeda leaders behind the Sept. 11, 2001 attacks on the United States, Obama said it showed "that their ideas are bankrupt".