US Secretary of State Condoleezza Rice, speaking to reporters after talks here with her Danish counterpart Stig Moeller, made it clear Washington was keeping its diplomatic options open in dealing with Iran.

She said the administration of President George W. Bush was looking at ways of supporting the effort by France, Germany and Britain to offer Tehran incentives if it will give up its suspected nuclear arms activities.

"We believe that the EU negotiations are leading in the right direction because what they are doing is they are confronting Iran with a choice about whether it is prepared to give the international community the kind of confidence it needs about Iranian activities," Rice said.

But she added: "Thus far the Iranians have shown no indication that they are interested in taking that deal."

She said "there is considerable concern about a number of Iranian activities," and reports from a meeting in Vienna of the UN nuclear watchdog were heightening suspicions about Tehran's intentions.

Governors of the International Atomic Energy Agency took Iran to task for a lack of cooperation with its inquiries but left room for the EU talks that seek guarantees Tehran is not developing atomic weapons.

Rice said the level of Iran's cooperation with the IAEA "is something of an indicator of whether or not the Iranians are indeed ready to be involved in the kind of activities, the kind of negotiations, the EU-3 is trying to conduct."

She said the possibility of taking the matter before the UN Security Council for discussion of sanctions remained an option "if we cannot get satisfaction about Iranian activities."

The chief US diplomat made her remarks as Washington was mulling European proposals for possible carrots to offer Tehran if it will give up activities that could lead to production of a nuclear bomb.

US officials initially reacted sceptically to the European effort and pushed for a quick referral to the UN Security Council. But the allies have sought to bridge their differences since President George W. Bush's European trip last month.

Rice said Thursday "we believe that the Iranian situation can be resolved diplomatically" and "we are supporting the EU-3 negotiations" but there was no timetable for a decision on possible incentives for Tehran.

She also insisted that any agreement with Tehran had to include safeguards, verification measures and constraints on Iranian activities in order to ensure they were in compliance.

"We are trying to be supportive of the EU-3 negotiations because anyone who can get Iran to verifiably, unambiguously live up to its international obligations not to develop nuclear weapons, it should be done and it can be done diplomatically."

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