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BEIJING (Reuters) - Companies from China and Iran will this weekend sign the first commercial contracts to redesign an Iranian nuclear plant as part of an international deal reached in 2015 over Iran's nuclear programme, China's Foreign Ministry said on Thursday.

The fate of the Arak reactor in central Iran was one of the toughest sticking points in the long nuclear negotiations that led to the agreement, signed by Iran with the United States, Britain, France, China, Russia and Germany.

In the redesign, the heavy water reactor will be reconfigured so it cannot yield fissile plutonium usable in a nuclear bomb.

Ministry spokesman Lu Kang said the contracts for the plant's redesign would be signed on Sunday in Vienna with initial agreements having already been reached in Beijing, describing it as an important part of the Iran nuclear deal.

China and the United States are joint heads of the working group on the Arak project, and progress has been smooth, Lu told a daily news briefing.

"The signing of this contract will create good conditions for substantively starting the redesign project," Lu said.

Iran has said that the 40-megawatt, heavy-water plant is aimed at producing isotopes for cancer and other medical treatments, and has denied that any of its nuclear activity is geared to developing weapons.

The announcement comes as U.S. Secretary of State Rex Tillerson accused Iran of "alarming ongoing provocations" to destabilise countries in the Middle East as the Trump administration launched a review of its policy towards Tehran.

Tillerson said the review would not only look at Iran's compliance with the 2015 nuclear deal but also its behaviour in the region which he said undermined U.S. interests in Syria, Iraq, Yemen and Lebanon.

Lu, while not directly referring to Tillerson's comments, said China hopes all parties could ensure the nuclear deal was implemented, appropriately handle disagreements and make positive contributions to nuclear non-proliferation and peace and stability in the Middle East.

(Reporting by Ben Blanchard; Editing by Robert Birsel)

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