Bonds News

UPDATE 1-EU readying freeze on Iran's biggest bank-diplomats

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BRUSSELS, May 23 (Reuters) - The European Union is preparing sanctions against Iran’s biggest bank but wants to see how Tehran responds to a new offer by major powers on its nuclear programme before acting, diplomats said on Friday.

An EU diplomat said the 27-nation bloc was making legal and technical preparations for an asset and funds freeze on state-owned Bank Melli -- a measure long sought by the United States to raise pressure on Iran to halt uranium enrichment.

But a source in the EU’s Slovenian presidency said Brussels would await an Iranian response to an updated offer of political and economic incentives, due to be delivered to Tehran soon by EU foreign policy chief Javier Solana, before ministers decide to approve the sanctions.

The West suspects Iran of seeking the ability to make nuclear weapons while the oil-producing Islamic Republic insists its secretive programme is purely aimed at generating energy.

The U.N. Security Council passed a third sanctions resolution against Iran last month and Washington has been pressing the Europeans to deny targeted Iranian banks access to the international financial system.

At the same time, the United States, Russia, China, Britain, France and Germany have agreed in principle to send a renewed offer of cooperation in areas ranging from civilian nuclear energy to aviation, trade, the fight against drug smuggling and security if Tehran complies with U.N. demands.

U.S. Treasury Undersecretary for Terrorism and Financial Intelligence Stuart Levey, who has been leading the banking sanctions drive, said last month the world’s top banks have already largely stopped dealing with Iran. (reporting by Mark John, writing by Paul Taylor)