U.S. Defense Secretary Robert Gates said on Saturday he saw no sign a deal was close between Iran and Western powers on exchanging some of its low-enriched uranium (LEU) for higher-grade fuel, suggesting it was time to move forward with sanctions.

"I don't have the sense that we're close to an agreement," Gates told reporters in Ankara where he met Turkish leaders.

His comments stood in contrast to those by Iran's foreign minister, Manouchehr Mottaki, who said on Friday he saw good prospects for clinching a deal with world powers on exchanging LEU for higher-grade fuel it can use in a reactor producing medical isotopes.

"If they are prepared to take up the original proposal of the P-5 plus one of delivering 12,000 kilograms of their low enriched uranium, all at once to an agreed party, I think there would be a response to that," he added, referring to the five permanent U.N. Security Council members plus Germany.

Gates said President Obama had taken unprecedented steps to engage with Iran, describing the response so far as "disappointing".

"But the reality is they have done nothing to reassure the international community that they are prepared to comply with the NPT (Non-Proliferation Treaty) or stop their progress towards a nuclear weapon, and therefore I think various nations need to think about whether the time has come for a different tack," Gates added, in an apparent reference to sanctions.

"The P5 plus one has always had a dual track approach - that engagement would be tried first, and if that didn't work, then pressure would be applied. The purpose of the pressure would be to bring Iran back to the negotiating table to negotiate seriously about constraining this program," he added.

On Friday, Mottaki said his country wanted changes to an internationally proposed plan that would allow it to keep its controversial nuclear program, but said he was optimistic that a deal could be reached.

The message, in an interview set to run in the Saturday edition of the Sueddeutsche Zeitung, came just days after Iran's President Mahmoud Ahmadinejad signaled that his country was ready to accept the deal, in what was seen as a possible breakthrough.

The agreement proposed by the International Atomic Energy Agency (IAEA) would see Iran ship low-intensity uranium abroad for enrichment and later re-import it for use in a medical reactor, used to fight cancer, in Tehran.

The deal was proposed to allow Iran access to nuclear fuel without having to enrich its own uranium.

Iran faces a possible fourth round of UN Security Council sanctions over its uranium enrichment work which Western nations believe is designed to develop a nuclear bomb.

Tehran denies this and says its atomic program is only for civilian purposes.

"We think that this process would allow us to enter into a new atmosphere of trust... We have signaled our agreement on the highest level, through our president, and that is an important point," Mottaki told the newspaper.

But at the same time, he warned that his country would not accept the IAEA's proposed timeline, which would see Iran export its uranium and wait for up to a year before receiving the enriched fuel.

Western nations have so far insisted that Tehran stick to the full terms of the IAEA proposal.

But Mottaki said that the diplomatic atmosphere had improved in recent months, suggesting that a final deal might be possible.

"The most important point is the political will to exchange fuel... It's important that both sides undertake confidence-building measures. We have the feeling that that is happening," he said.

Mottaki was speaking on the margins of the Munich Security Conference, at which he registered as a last-minute speaker on Friday morning.

China FM urges patience, while Russia hints at tougher UN stance

China's foreign minister on Friday urged the world to be patient and keep up diplomatic efforts with Iran to try and find a solution to Tehran's nuclear ambitions.

Foreign Minister Yang Jiechi told a gathering of the world's top defense officials that negotiations with Iran's government have entered a crucial stage.

"The parties concerned should, with the overall and long-term interests in mind, step up diplomatic efforts, stay patient and adopt a more flexible, pragmatic and proactive policy," he said. "The purpose is to seek a comprehensive, long-term and proper solution through dialogue and negotiations."

China's insistence on diplomacy comes just after Russian Foreign Minister Sergei Lavrov said earlier Friday that UN Security Council members may have to discuss Iran if the Islamic Republic fails to behave constructively in a dispute over its nuclear work.

A permanent member of the UN Security Council, China is a major player in the dispute with Iran over its nuclear activities.

At a joint news conference with German Foreign Minister Guido Westerwelle in the German capital, Lavrov signaled Moscow may be ready to take a tougher stance on Iran.

"In certain situations, if we do not see a constructive response on the part of Iran, we will probably have to discuss this issue within the UN Security Council," Lavrov told reporters, adding he still hoped to find a diplomatic solution.

Earlier, organizers of Germany's Munich Security Conference, which starts on Friday, announced the surprise attendance of Mottaki. The Islamic Republic's disputed nuclear program is set to take center stage at the event.

At the three-day annual event, top world politicians and diplomats will discuss security issues in the Middle East and elsewhere in a series of speeches and panel discussions, and some will hold informal talks with each other.

A conference spokeswoman said it had been confirmed that Mottaki would take part but she gave no details of when he might speak. An earlier program had not mentioned Mottaki.

Senior Iranian officials have attended the conference in the past and sometimes held bilateral meetings with European officials.

A spokesman for Germany's foreign office said he could not exclude the possibility that Mottaki would meet Westerwelle or other senior officials, but that there had been no decision yet.

Westerwelle said before meeting Lavrov on Friday that Iran had been using delaying tactics instead of taking action to resolve the dispute over its nuclear program.

"For the past two years Iran has repeatedly bluffed and played tricks," Westerwelle told Deutschlandfunk radio. "It has played for time and of course we in the international community cannot accept a nuclear-armed Iran."

Other conference attendees include Russia's Deputy Prime Minister Sergei Ivanov, European Union foreign policy chief Catherine Ashton, Yukiya Amano, director general of the International Atomic Energy Agency (IAEA), and U.S. national security adviser James Jones.