With images of bloodied protesters in Tehran's streets recalling the Islamic revolution 30 years ago, Obama said an investigation into alleged vote-rigging should go ahead without additional violence.

"It would be wrong for me to be silent on what we've seen on the television the last few days," Obama told reporters at the White House.

"And what I would say to those people who put so much hope and energy and optimism into the political process, I would say to them that the world is watching and inspired by their participation, regardless of what the ultimate outcome of the election was," Obama said. "And they should know that the world is watching."

An Associated Press photographer saw at least one demonstrator killed Monday, and several others with what appeared to be serious injuries.

Hundreds of thousands of restive Iranians streamed through the capital streets, and the fist-waving protesters denounced President Mahmoud Ahmadinejad's claim to a landslide re-election. Standing on rooftops, pro-government gunmen opened fire on a group of protesters who had tried to storm the militia's compound.

Obama campaigned on a promise to extend a hand to the United States' main rival for influence in the Middle East, and the prospect of a different relationship with the United States was a constant, if largely unspoken, theme in the hardline Ahmadinejad's contest with a pro-reform challenger.

Obama was asked whether the violence had changed his outlook on the value of outreach to the clerical regime. While denouncing violence against demonstrators, Obama said he remains committed to what he called "tough, hardheaded diplomacy" with a nation that could soon possess nuclear weapons.

The United States has a broader interest in stopping Iran from developing those weapons or exporting terrorism, Obama said.

His response marked the most extensive U.S. response to Friday's voting, and appeared calculated to acknowledge the outpouring of dissent in Iran without claiming any credit.

"Sometimes, the United States can be a handy political football," Obama said.

The new American president is personally hugely popular in Iran, and all candidates in this year's surprisingly lively presidential election trod carefully on criticism of the United States as a result. But the larger idea of the United States, and its world influence backed by massive military power, remains highly divisive. Any candidate or popular movement seen to have the express backing of the United States would probably be doomed.

"We will continue to pursue a tough, direct dialogue between our two countries, and we'll see where it takes us," Obama said.

He called some of Ahmadinejad's past statements "odious," and did not mention the challenger, Mir Hossein Mousavi, by name. Ahmadinejad has said Israel should be "wiped from the map" and questioned the extent of Jewish extermination in the Holocaust.

Ahmadinejad's challenger claims he was robbed of the presidency and has called for the results to be canceled.

Obama did not go that far.

He said peaceful dissent should never be subject to violence, but that he had no way of knowing whether the results were valid. Obama noted that the United States had no election monitors in the country.

He appealed to young Iranians, largely seen as determinative of Iran's political future over the coming five to 10 years. A quarter of the population of some 70 million is 15 years old or younger.

"I want them to know that we in the United States do not want to make any decisions for the Iranians, but we do believe that the Iranian people and their voices should be heard and respected," Obama said.