Iran rules out nuclear halt despite powers' offer

TEHRAN (Reuters) - Iran again ruled out suspending sensitive nuclear work on Saturday, despite an offer by six world powers of trade and other benefits to try to coax it into stopping activities the West fears are aimed at making bombs.

European Union foreign policy chief Javier Solana reaffirmed the six powers behind the package wanted Iran to suspend enrichment during talks on the offer -- a precondition the Islamic Republic has repeatedly rejected.

"The proposals we have made offer substantial opportunities for political, security and economic benefits to Iran and the region," their foreign ministers said in an accompanying letter.

"We are convinced that it is possible to change the present state of affairs. We hope that Iran's leaders share the same ambitions," they said.

The incentives offer agreed by the United States, Russia, China, Britain, France and Germany last month is a revised version of one rejected by Iran in 2006.

Diplomats have played down prospects for a breakthrough in a dispute that has helped send oil prices to record highs.

The United States and its European allies have warned of broader sanctions against Iran if it rejects the proposal and presses ahead with atomic activities which can have both civilian and military uses.

Solana said he expected a reply soon from Iran, which says it will not stop a nuclear programme it says is for generating electricity so that the world's fourth-largest oil producer can export more crude and natural gas.

He said he hoped the powers' overture, tailored to coax Tehran into stopping pursuit of enrichment ability, a possible pathway to atom bombs, would be a springboard to negotiations.

"We continue to ask for suspension," Solana told a news conference after presenting the incentives package to Iran's Foreign Minister Manouchehr Mottaki.

BUSH "DISAPPOINTED"

The offer included help for Iran to develop a civilian nuclear programme with light water reactors -- seen as less prone to diversion into bombmaking than technology Tehran now has -- and legally-binding nuclear fuel supply guarantees.

"We are offering a proposal which we would like to be the starting point for real negotiations," Solana said.

The six powers were ready to fully recognize Iran's right to have nuclear energy for peaceful purposes, he said.

Flush with record oil revenues that have helped it withstand U.N. sanctions imposed over its nuclear defiance, Iran has long ruled out ending its quest for its own enrichment industry.

"Iran's view is clear: any precondition is unacceptable," government spokesman Gholamhossein Elham said when asked about the batch of sweeteners. "If the package includes suspension it is not debatable at all."

Although Iran has not officially rejected the offer, U.S. President George W. Bush said he was disappointed when asked about Elham's statement during a visit to Paris.

"I am disappointed that the Iranian leaders rejected this generous offer out of hand," Bush told a joint news conference with French President Nicolas Sarkozy, adding it was a sign that Iran's leadership was willing to isolate its people further.

Sources on both sides said Iranian officials and Solana had still agreed to resume efforts to find a diplomatic solution.

Mottaki suggested Iran was ready to engage in negotiations, but said its response to the major powers' incentives depended on their reaction to Tehran's own package of proposals aimed at defusing the row, submitted to the EU and others last month.

Diplomats say Iran's proposals failed to allay concerns about its uranium enrichment programme.

Iran's refusal to stop enriching uranium, which can be used as fuel for power plants or provide material for bombs, has drawn three rounds of U.N. sanctions since late 2006.

The United States says it wants a diplomatic solution but has not ruled out military action as a last resort.

(Additional reporting by Hashem Kalentari and Zahra Hosseinian; Writing by Mark Heinrich and Fredrik Dahl; Editing by Michael Roddy)