Admiral Michael Mullen told the Fox network he felt "encouraged by the talks" that were held Saturday in Geneva between Iranian, European and US officials as part of a bid to resolve a long-running dispute over Iran's nuclear plans.

Iran's top nuclear negotiator Saeed Jalili and EU foreign policy chief Javier Solana hailed their talks as "constructive" but Solana lamented that Tehran had still not given a final response to a proposed package of incentives for Tehran to abandon its nuclear program.

"I believe that the international community needs to continue to bring pressure on Iran both economically, financially, diplomatically, politically, to continue to bring them to a point where we can all deal with this issue of nuclear weapons," Mullen said.

"The pressure has got to continue to be brought specifically on Iran to not proceed in this regard."

Saturday's talks ended in stalemate, with Tehran now facing a two-week deadline to give a final answer to world powers seeking a breakthrough in a crisis which has raised fears of regional conflict and sent oil prices spiralling.

World powers have offered to start pre-negotiations during which Tehran would add no more uranium-enriching centrifuges and in return face no further sanctions -- the so-called "freeze-freeze" approach.

Convinced that the Iranians are seeking to build an atomic bomb, Mullen said he felt "that's a very destabilizing possibility in that part of the world."

"I'm fighting two wars and I don't need a third one," Mullen said, referring to US engagement in Iraq and Afghanistan.

The admiral stressed that the United States did have the capacity and "the reserves" to attack Iran as a last resort, but warned of "possible unintended consequences" and the difficulties in predicting regional impacts of an attack on Iran.

Iran has repeatedly vowed a crushing response to any aggression against its soil, with Iranian officials stressing the armed forces would target Israel and dozens of US bases in the region in retaliation.

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