By Steven ScheerJERUSALEM, July 23 (Reuters) - A deal between the United States and Saudi Arabia allowing the kingdom to build nuclear reactors using American technology and to enrich uranium has fuelled fears in Israel of the start of an arms race in the Middle East.The agreement, which still needs Congressional approval, that was announced on Wednesday is meant to allow the Saudis to develop a civilian nuclear programme.

The deal is expected to be a financial windfall for American companies but is likely to raise concerns of nuclear proliferation in the Middle East.

Israeli sources warn the provision could spur regional proliferation if Washington ultimately allows Riyadh to enrich uranium on its own soil