WRAPUP 5-Trump says Iran deal averted 'economic catastrophe' but says he could still restart war

US President Donald Trump defended his interim agreement with Iran, saying it had averted a global economic catastrophe and warned of potential fresh attacks if Tehran fails to honour its commitments.

(Recasts with new Trump comments, paragraphs 1-3, 6, 20-22, adds U.S. official, paragraph 9, details of plan, paragraphs 10-11, oil prices, paragraphs 7-8, ) By ‌Steve Holland ​and Jihed Abidellaoui

EVIAN-LES-BAINS, France/NABATIEH, Lebanon, June 17 (Reuters) - U .S. President Donald Trump on Wednesday defended his interim agreement with Iran, saying it had averted a global economic catastrophe, while warning he could launch fresh attacks if Tehran failed to honour its commitments. Speaking at the close of a G7 summit in France, Trump also said maritime traffic in the Strait of Hormuz had risen sharply since the truce was announced three days ago and expressed hope it could mark the ‌start of a wider peace across the Middle East.

"We're going to bomb the hell out of them (Iran) if they violate the agreement. I don't want them to. I want them to honor the agreement," Trump told a press conference, adding that the Iranians were "smart people". Earlier, he had said: "If I don't like it, if they (Iran) don't behave, we'll go right back to dropping bombs right smack in the middle of their head, OK?" The war, which began with U.S. and Israeli strikes on Iran on February 28 and spiraled into a broader regional conflict, has driven up energy prices, renewed inflationary pressures and sparked concerns about a major food supply crisis in developing countries.

"So ‌the one thing I didn't want to see is, I didn't want to see economic catastrophe. If you kept this going, that could have happened," Trump said. He thanked Chinese President Xi Jinping and Russian President Vladimir Putin for being "neutral" during the conflict, saying they had not thwarted his efforts to curb Tehran's ‌nuclear ambitions. Oil prices fell again on Wednesday on prospects for the reopening of the Strait of Hormuz, with Brent crude futures below $80, at their lowest level since the opening salvos of the U.S.-Iran conflict. But they later regained more than 1% after Trump said he could resume the war if he was unsatisfied with Iran. Speaking to reporters, a senior U.S. official read out the text of the signed memorandum of understanding with Tehran but said the parties could still walk away until a binding deal is reached. The 14-point draft, which had already circulated widely before its contents were published, extends a ceasefire announced in April by another 60 days to allow the two sides to negotiate a permanent truce. G7 LEADERS WELCOME IRAN DEAL

The memorandum includes an immediate end to the war on all fronts, ⁠including Lebanon, the ​full resumption of maritime traffic in the Strait of Hormuz, the lifting of a ⁠U.S. blockade of Iranian ports, the waiving of international sanctions on Iran, and a plan worth $300 billion for the economic rehabilitation of the Islamic Republic. Iran also undertakes not to build nuclear weapons, reaffirming a vow it had made for decades. Despite his typically combative rhetoric, Trump appears to have achieved little of what he said he wanted at the outset of the war.

Iran's theocratic government remains in ⁠place, its stockpile of highly enriched uranium has not been surrendered, its ballistic missile capabilities have not been destroyed and it has not ended its support for anti-Israel militias like Hezbollah in Lebanon. However, G7 leaders hailed the agreement at their summit, held in the French town of Evian-les-Bains, an hour's drive along the shore of Lake Geneva from where the Iran ceasefire memorandum ​is due to be signed at a ceremony across the Swiss border on Friday.

They share Washington's concerns about Iran's nuclear programme and other issues, but never endorsed his decision to go to war, and worry Tehran has gained leverage by withstanding the superpower onslaught and asserting control over ⁠the strait. "We underline the need for the negotiation ... to address the threats posed by Iran in the region and beyond and ensure that they never obtain a nuclear weapon," the leaders of France, Germany, Britain, Japan, Italy, Canada and the U.S. said in a statement.

They also demanded an immediate ceasefire in Lebanon, where the memorandum calls for a halt to hostilities between Israel and the Iran-backed Hezbollah group that ⁠have ​displaced more than a million people. Fighting there has abated but not ceased since the agreement was reached on Sunday, and Israel, which was not part of the negotiations, says it retains the right to use force.

TRUMP CHIDES NETANYAHU Trump on Wednesday gently rebuked Israeli Prime Minister Benjamin Netanyahu over his tactics in Lebanon against Hezbollah. The two men have repeatedly clashed over Israel's refusal to constrain its pursuit of Hezbollah in Lebanon, where a cessation of hostilities is a key Iranian demand.

"Netanyahu happens to be a good man, gets a little excited sometimes," Trump told reporters. "We have a little dispute over Lebanon. I say you can do ⁠a little softer touch, Bibi," he said, using Netanyahu's nickname. "You don't have to knock down a building every time somebody walks into it that's from Hezbollah."

Lebanese state media reported fresh Israeli air strikes and artillery fire in several southern towns throughout Wednesday. Lebanese security sources said Hezbollah had also launched ⁠two drone attacks on Israeli forces in the south. The group did not publicly claim the ⁠attacks. Israel later said five of its soldiers had been injured in two Hezbollah drone attacks in southern Lebanon.

MOST IRANIANS 'ARE IN SURVIVAL MODE' The mood among ordinary Iranians, grappling with economic woes further exacerbated by months of war, remained grim, even as their leaders declared this week's interim deal a diplomatic victory for Tehran over Washington. "I think 99% of people are in survival mode and just living day by day," said Amir, 34, a media production company owner in Isfahan in ‌central Iran, who declined to give his surname.

"I ‌don’t think anybody has any hopes anymore. I don’t think anybody has any visions of what the future might look like."