* Houthis say launch targeted Saudi leaders
* Saudis say it targeted residential areas
* Witnesses hear blast, see smoke
* Saudi-led coalition, Houthis fight in Yemen war
* Iran denies supplying missiles to Houthis
Saudi air defences intercepted a ballistic missile fired towards the capital Riyadh on Tuesday, the Saudi-led coalition said, the latest attack by a Yemeni group that could escalate a proxy war between the kingdom and regional rival Tehran.
There was no immediate report of casualties or damages.
The Houthi movement said the missile targeted the royal court at al-Yamama palace, where a meeting of Saudi leaders was under way, describing the attack as a new chapter in the conflict.
The Saudi-led coalition said the missile was directed at residential areas and there were no damages, the Saudi state news agency SPA reported.
Quoting a statement from the coalition, SPA said Iranian- made missiles were a threat to regional and international security, and accused the Houthis of using humanitarian entry points to import missiles from Saudi Arabia's arch-foe Iran.
"Coalition forces confirm intercepting an Iranian-Houthi missile targeting (the) south of Riyadh. There are no reported casualties at this time," the government-run Center for International Communication wrote on its Twitter account.
Saudi palaces, military and oil facilities are within range of such missiles fired from Yemen, the Houthis said, according to a statement distributed via their television channel al-Masirah.
Thousands of air strikes
Saudi Arabia and Iran are locked in struggle for influence in the Middle East. Riyadh is especially sensitive to the civil war in its backyard Yemen, a conflict that has killed more than 10,000 people and displaced over two million.
The United Arab Emirates, a close ally of Saudi Arabia and part of the coalition, said the latest Houthi attack underscored the need to keep the military campaign in Yemen going.
"With every Iranian missile fired by the Houthi militia against civilian targets, the necessity of (Operation) Decisive Storm becomes clear," United Arab Emirates minister of state for foreign affairs, Anwar Gargash, wrote on his Twitter account.
A Saudi-backed coalition has launched thousands of air strikes against the Houthis and allied forces since intervening in the war on behalf of the government nominally based in Aden.
The Houthis for their part have fired several missiles at the kingdom, mostly in the south since 2015, but not caused any serious damage, in their bid to pressure Saudi Arabia, a strategic US ally and the world's biggest oil exporter.
Tuesday's attack took place hours before Saudi Arabia was due to announce the country's annual budget in a news conference expected to be attended by senior ministers.
A blast, and then smoke
Houthi missiles are often modified by reducing payloads and rarely hit their targets.
Reuters witnesses described hearing a blast and said they saw smoke in the north-east of Riyadh.
Saudi Arabia's Crown Prince, Mohammed bin Salman, has described what Riyadh says is Iran's supply of rockets to the Houthis as "direct military aggression" that could be an act of war.
Iran, Saudi Arabia's regional foe, has denied supplying such weaponry to the Houthis who have taken over the Yemeni capital Sanaa and other parts of the country during its civil war.
Saudi Arabia said on Nov. 4 it had intercepted a ballistic missile over Riyadh's King Khaled Airport, an attack that stirred regional tensions and led the coalition to close Yemeni ports.
On Nov. 30 Saudi Arabia shot down another missile near the south-western city of Khamis Mushait.
Last week the United States presented for the first time pieces of what it said were Iranian weapons supplied to the Houthis, describing it as conclusive evidence that Tehran was violating UN resolutions.
The arms included charred remnants of what the Pentagon said was an Iranian-made short-range ballistic missile fired from Yemen in the on Nov. 4 attack, as well as a drone and an anti-tank weapon recovered in Yemen by the Saudis.
In Geneva, a UN human rights spokesman said air strikes by the Saudi-led coalition had killed at least 136 civilians and non-combatants in Yemen since December 6.