World leaders appealed for calm Friday after reported Israeli retaliation against Iran added to months of tense spillover from the war in Gaza, with Iranian state media reporting explosions in a central province.

Israeli officials made no public comment on the attack and Iranian officials played down its significance.

Iranian Foreign Minister Hossein Amir-Abdollahian said Israeli micro-drones used in the operation had caused no deaths or damage, dismissing it as a "desperate attempt to make a victory out of their repeated defeats".

But the spectre of direct hostilities between the Middle East arch-foes rattled world markets with prices of oil, gold and equities seesawing.

Israel had warned it would hit back after Iran fired hundreds of missiles and drones almost a week ago in retaliation for a deadly April 1 air strike -- widely blamed on Israel -- that levelled the Iranian consulate in Damascus and killed seven Revolutionary Guards.

A senior US Congressional source told AFP there had been retaliatory Israeli strikes but declined to provide any details, saying they were classified.

A senior US Congressional says Israeli strikes but declined to provide any details, saying they were classified.

After state television said explosions were heard near the city of Isfahan, Iran activated its air defence systems over several cities, official media reported.

An unidentified Israeli official told The Washington Post the "strike" was retaliation for Iran's drone and missile barrage and was intended to signal that Israel was able to hit inside Iran.

Iran's Tasnim news agency, citing "informed sources", denied that Iran had been attacked from outside.

"Contrary to the rumours and claims" made in foreign media, "there are no reports of an attack from abroad", Tasnim said.

Iranian worshippers chant slogans during an anti-Israeli gathering after their Friday prayer in Tehran. AP

Three Iranian officials told The New York Times that small drones carried out the "attack", possibly launched from inside Iran, and that radar had not detected unidentified aircraft entering Iranian airspace.

Fars news agency reported "three explosions" close to Qahjavarestan, near Isfahan airport and the 8th Shekari army airbase.

Iran's space agency spokesman Hossein Dalirian said there was "a failed and humiliating attempt to fly quadcopters, which were shot down".

There were "no reports of a missile attack", Dalirian said on social media platform X.

"Reports indicate there was no major damage or large explosions caused by the impact of any air threat," the official IRNA news agency said.

Agence France-Presse