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By Tom Perry and Laila Bassam BEIRUT (Reuters) - The leader of Lebanon's Hezbollah said on Friday his group did not want war with Israel but was ready for one, and reserved the right to respond to Israeli attacks any time, anywhere. "We do not want a war but we are not afraid of it and we must distinguish between the two, and the Israelis must also understand this very well," Sayyed Hassan Nasrallah said. Nasrallah was speaking at an event to commemorate the deaths of six Hezbollah fighters and an Iranian general killed by an Israeli air strike in Syria on Jan. 18. The Iranian-backed Hezbollah hit back on Wednesday with a rocket attack that killed two Israeli soldiers on the frontier with Lebanon. The violence has raised tensions between Israel and Hezbollah to their highest point since they fought a 34-day war in 2006, but both sides have appeared to back away from further escalation. Branded a terrorist organization by Washington, the Shi'ite Hezbollah movement has both a military wing and a political party that is part of the Lebanese government. Addressing a hall full of supporters via video link, Nasrallah said it would hold Israel responsible for the assassination of any of its leaders or fighters. "We have the right to respond in any place and at any time and in the way we see as appropriate," Nasrallah said. The speech was broadcast live on Arabic news channels and greeted by heavy celebratory gunfire in Beirut. Israel had no immediate comment after Nasrallah's speech, but shortly beforehand Prime Minister Benjamin Netanyahu blamed the upsurge in violence on Hezbollah's Iranian sponsors. "We are under continued assault orchestrated by Iran, let there be no doubt about it. Iran is trying to uproot us, they won't succeed," Netanyahu told soldiers wounded in Wednesday's attack, now convalescing in hospital. He has previously said those behind Wednesday's attack would "pay the full price". Foreign Minister Avigdor Lieberman, campaigning in the occupied Golan Heights for Israel's March 17 parliamentary election, said: "We ought to respond in such a way that nobody would think twice again about attacking Israel." IRANIAN LINK Attendees at the Hezbollah event included visiting Iranian official Alaeddin Boroujerdi, head of the Iranian parliament's national security and foreign policy committee. He was shown with tears in his eyes as Nasrallah spoke about the men killed in the Jan. 18 Israeli helicopter attack in the Syrian Golan Heights. The dead included a Hezbollah commander and Jihad Mughniyeh, the son of the group's late military leader, Imad Mughniyeh, who was assassinated in Damascus in 2008. The Iranian general killed, Mohammad Allahdadi, had been a senior figure in Tehran's military effort to support the Syrian government in its battle against insurgents trying to topple President Bashar al-Assad. Hezbollah is also fighting alongside Syrian government forces and allied militia in the civil war. One of the top figures in the Iranian Revolutionary Guards, Qassem Soleimani, visited the grave of Jihad Mughniyeh the day after his funeral, a Lebanese source said. A picture of Soleimani, head of the Quds Force, praying at Mughniyeh's grave was broadcast by Lebanese television channel Al-Mayadeen. Soleimani had become a father figure to Jihad Mughniyeh after his father's death, the source said. Soleimani also met Nasrallah during his short visit to Beirut. Nasrallah said Hezbollah, which launched the attack from the Israeli-occupied Shebaa Farms, had gone into the operation "ready for the worst possibilities." "What happened in the Shebaa Farms was more than vengeance but less than a war," he said. (Additional reporting by Dahlia Nehme and by Allyn Fisher-Ilan in Jerusalem; Writing by Tom Perry; Editing by Mark Trevelyan)