Robert Gates, nominated to replace Donald Rumsfeld as U.S. defense secretary, on Tuesday said Iran was trying to acquire nuclear weapons and its leaders were lying when they said the program is strictly civilian.

He said he was not sure Iran would attack Israel with such weapons because "the risks for them (Iran) are enormously high." But he also said the United States could not assure Israel that a nuclear attack by Iran would not happen.

"I don't think anybody can provide that assurance," he told the committee.

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When asked at the U.S. Senate Armed Services Committee hearing on his nomination whether he believed Iran was seeking a nuclear weapons capability, he responded, "Yes, sir, I do."

Asked if he believed Iran's leaders were lying, Gates responded, "Yes, sir."

Iran says its nuclear work is aimed at generating electricity, but the West suspects Tehran is using the civilian program as cover to build an atomic bomb.

Gates also conceded that the United States is not winning the war in Iraq and warned that if that country is not stabilized in the next year or two
it could lead to a "regional conflagration."

"In my view, all options are on the table, in terms of how we address this problem in Iraq," he added.

Meanwhile, senior diplomats from six world powers who met in Paris on Tuesday failed to reach a full agreement on a draft resolution for a sanctions plan against Iran and its nuclear program, the French foreign ministry said.

"We made substantive progress on the scope of the sanctions, targeting proliferation-sensitive activities. There remain several outstanding issues, on which we will reflect over the coming days," the foreign ministry said in a statement.

"We all agree on the necessity of adopting an effective resolution. We are now close to a conclusion of this process. The next step will be in New York."

Earlier Tuesday, Foreign Minister Sergei Lavrov said tough sanctions on Iran to punish it for pursuing uranium enrichment would be counter-productive.

"We believe it is irresponsible to impose these kind of sanctions," Lavrov told reporters on the margins of a meeting of the Organisation for Security and Cooperation in Europe in Brussels.

"We would achieve the opposite result if we do that," he said of Western efforts to get Russia and China to agree a UN Security Council resolution setting out penalties on Tehran for refusing to halt nuclear activities the West suspects are aimed at building an atom bomb - a goal Tehran denies.

Iranian President Mahmoud Ahmadinejad on Tuesday warned Europeans his country will consider any decision against its nuclear rights an act of "hostility."

His statement came as political directors from United Nations Security Council permanent members Russia, China, France, Britain and the United States, as well as Germany were to attend the latest round of talks in Paris on the diplomatic impasse between the West and Iran over its nuclear program.

"I'm telling you in plain language that as of now on, if you try, whether in your propaganda or at international organizations, to take steps against the rights of the Iranian nation, the Iranian nation will consider it an act of hostility," Ahmadinejad said, addressing thousands of people in northern Iran.

"And if you insist on pursuing this path, it (Iran) will reconsider its relations with you," he warned European nations.

"Our path to reach the nuclear summit is in the final phase, and no more than one more step is needed," Ahmadinejad told the rally.

"Iran possesses the nuclear fuel cycle completely and by God's will it will undertake necessary measures to produce nuclear fuel for all of its nuclear power stations," he said.

Despite Russia's refusal to agree to tough sanctions on Iran, the French foreign minister said Moscow is likely to back a decision to pressure Tehran on is nuclear plan.

Russia has consistently refused to agree to measures that would be seen as a punishment of Tehran for its refusal to meet the August 31 UN deadline to abandon uranium enrichment, which can produce fuel for nuclear power plants or atom bombs.

French Foreign Minister Philippe Douste-Blazy said after talking with his Russian counterpart Sergei Lavrov on Monday that progress had been made on the wording of a sanctions resolution.

"I think that we can now reach an agreement on the text," he told reporters after meeting Lavrov on the sidelines of the OSCE meeting.

"We are in agreement with Russia to adopt sanctions against the Iranian programme of proliferation."

EU diplomats say the sanctions called for in the text will be largely symbolic.

However, they say unanimous approval of even mild sanctions will send a strong signal to Tehran that the world is determined to stop Iran obtaining nuclear arms.

Also Tuesday the country's nuclear negotiator Ali Larijani said at a regional forum in Dubai that American "unilateralism" could cause more conflict in the Middle East.