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Sephiroth, rather like Terra, was created to fight (well, Terra wasn't created to fight, but she was raised to by Kefka.) She, like Sephiroth, has part of something from another world in her: Sephiroth carries the JENOVA cells (along with Mako and various other things;) similarly, Terra is half-Esper. Both of them have another similarity: they totally lost control at some point in their original games (resulting in Terra flying around half the world as an Esper, which you had to follow for plot reasons; Sephiroth caused the Nibelheim Incident.)

So, it could be that he has a certain amount of undersanding(and possibly pity) for Terra, and how she feels. However, Sephiroth tells Jecht he "seems quite worked up". This could be interpreted as respect or an opponent worth challenging, too.

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