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Iran said on Saturday it would reject any proposal to drop uranium enrichment, a step European Union diplomats are proposing to end a row over whether Iran is seeking atomic weapons.

EU diplomats have said they are seeking U.S. and Russian support for a deal that would ask Iran to give up uranium enrichment in return for technical and economic assistance.

"Any proposal which deprives Iran of its legitimate right to a fuel cycle is not acceptable," Hossein Mousavian, Iran's head of foreign policy on the Supreme National Security Council, told state television.

However, he said he was not responding to a specific offer.

"We have not yet received the text of the proposal and have to see what it contains to assess it," he said.

Uranium, if enriched to a low level, can be used to fuel nuclear power stations such as the one Iran is building at the southern port of Bushehr.

If enriched further it can be used in nuclear warheads but Iran denies accusations by Washington that it has military nuclear ambitions and argues its atomic program is solely dedicated to meeting booming demand for electricity.

Europeans to offer Iran inducements to end nuke programThree European allies notified the United States on Friday they intend to offer Iran a package of inducements next week in hopes of persuading Iran to halt nuclear weapons development, but the administration withheld its approval of the overture.

The three allies, Britain, France and Germany, agreed with the administration at a three-hour State Department meeting that this would be Iran's final chance to avert the threat of UN economic sanctions, a U.S. official said.

Despite the administration's tepid response, it did not try to stop the Europeans from going ahead, said the official, who spoke on condition of anonymity.

A European diplomat who attended the meeting said it was inconclusive, and no follow-up meeting was scheduled before the International Atomic Energy Agency, the nuclear watchdog of the United Nations, reviews Iran's program next month.

Tom Casey, a State Department spokesman, said all eight nations that attended the meeting - the United States, Britain, France, Germany, Italy, Canada, Japan and Russia, meeting as the Group of Eight - agreed that Iran "should not be allowed to defy any longer" its obligations to the IAEA.

Casey also reiterated the administration's longtime position that Iran's lack of compliance must be reported to the UN Security Council.

The administration hopes to exact economic penalties there that would squeeze Iran into abandoning any aspirations to become a nuclear power. The administration has lacked the necessary votes so long as Britain, France and Germany negotiated with Tehran in search of a compromise.

In the meantime, Russian officials said in Moscow that construction had been completed at the Bushehr nuclear reactor in Iran, and it hoped to sign agreements next month on shipping nuclear fuel to Tehran.

The United States is worried the $800 million project could help Iran build nuclear weapons. But Russia, dismissing such suspicions, maintains that having Iran ship spent nuclear fuel back to Russia will serve as a preventive.

The Bush administration sought to lower any expectations of a breakthrough before Friday's G-8 meeting to consider whether to try to induce Iran to halt its nuclear program.

At the center of the discussions was a European proposal to offer trade and fuel supplies if Tehran would stop enriching uranium, a key step toward producing nuclear weapons.

The United States stressed the shared goal of stopping the program and pressed the idea of taking the issue to the Security Council should Iran did not comply before the IAEA board of governors meets in Vienna, Austria, in late November.

Diplomats close to the talks said the European package of incentives included fuel for Iran's civilian programs and a trade arrangement with the European Union.

Even though the Bush administration was reluctant to offer carrots to Iran, the meeting reflected a willingness to consult with allies - a strategy that Democratic presidential candidate John Kerry contends has been ignored under President George W. Bush.