Iran says it won't halt nuclear work, talks to EU

By Edmund Blair

TEHRAN (Reuters) - Iran and the representative of six world powers talked by telephone on Monday without resolving a row over Tehran's sensitive nuclear work, which the Islamic Republic said would not be stopped.

A European Union official said the telephone call was "not conclusive" and Washington said it expected a written response from Tehran on Tuesday, warning of more sanctions unless it was "positive".

Western officials had set an informal deadline of last Saturday for Tehran to respond to the offer by the powers to refrain from steps to impose more U.N. sanctions, if Iran froze expansion of its nuclear work.

Iran dismissed the deadline set by Western capitals. Before the call between Iran's chief atomic negotiator Saeed Jalili and European Union foreign policy chief Javier Solana, an Iranian official said Iran would not discuss a freeze.

The West fears Iran aims to build nuclear warheads under cover of a civilian program, a charge Tehran denies.

In comments likely to stoke tension, Iran's Revolutionary Guards chief said the Islamic Republic had the ability to close the Strait of Hormuz, a vital oil shipping route, if attacked. The Guards also said they had tested a new naval weapon.

Around 40 percent of the oil traded in the world leaves the region through the Strait of Hormuz, a choke point at the southern end of the Gulf flanked by Iran and Oman. Washington has pledged to keep shipping routes open.

The United States has not ruled out military action but insists it wants diplomacy to end the row. Worries about a conflict flaring up have rattled oil markets in the past.

"The phone conversation has not been conclusive. We do not exclude new contacts in the coming days," the EU official told Reuters, adding Solana had been in touch with officials from the United States, France, Britain, Germany, Russia and China.

Iranian state radio said after the call: "They emphasized continuing the course of the Geneva talks. The preservation of this course requires a constructive and positive environment."

It said Solana and Jalili, who last met in person in Geneva in July, were expected to consult again in coming days.

"NO CHOICE"

Tehran said it would provide a written reply to the offer on Tuesday, the U.S. State Department spokesman said.

"We agreed in the absence of a clear, positive response from Iran that we have no choice but to pursue further measures against Iran as part of this strategy," he said.

Britain took the same line: "Unless tomorrow's answer is unambiguous and positive, we will have no choice but to proceed with further sanctions measures," a spokesman said.