Iran delays release of detained American

Sarah Shourd speaks with journalists during a news conference in Tehran May 20, 2010.

TEHRAN (Reuters) - Iran has canceled the planned release on Saturday of a detained American woman because the legal process has not been completed, Tehran's prosecutor said on Friday.

Iran had said earlier it would release Sarah Shourd, one of three Americans detained near Iran's border with Iraq in July 2009, on Saturday.

"Because the legal procedure on her case is not finished, her release is canceled," the ILNA news agency quoted prosecutor Abbas Jafari Dolatabadi as saying.

A presidential official, quoted by the state Irna news agency, said: "The spy's release had been delayed."

That official did not name Shourd and gave no further information.

Foreign Ministry spokesman Ramin Mehmanparast said earlier on Friday President Mahmoud Ahmadinejad had intervened in the planned release of Shourd who, along with the two other detained Americans, has been accused of spying.

"The reports (on her release) cannot be confirmed by the judiciary and of course any decision on the named suspects depends on taking the legal procedure," he said.

Dolatabadi did not say when she would be freed.

Intelligence Minister Haidar Moslehi has said Tehran has proof the three Americans had links to intelligence services. He said last month the investigation into the spying allegations would be completed soon.

The families of Shourd, Shane Bauer and Josh Fattal say they were on a mountain hike in northern Iraq at the time of their arrest. Washington says the spying allegations are unfounded.

Iran had said the three would be put on trial, without giving a date. They have not been formally charged but under Iran's Islamic law, espionage can be punishable by execution.

Journalists have been invited to attend a ceremony on Saturday at the Esteqlal Hotel in Tehran for the release of Shourd.

Washington, which cut diplomatic ties with Iran after its 1979 Islamic revolution, called on Thursday for the immediate release of all three, saying they had committed no crime.

Their case has further complicated relations between Tehran and Washington already fraught over Iran's nuclear activities.

Western powers suspect Iran is trying to develop nuclear weapons under the cover of a civilian atomic energy program. Tehran denies this, saying it needs nuclear technology to generate electricity.

President Mahmoud Ahmadinejad said in February the three U.S. citizens might be released in exchange for Iranians jailed in the United States.

(Editing by Angus MacSwan)