Iran nuke proposal 'positive' - Ahmadinejad

Iranian President Mahmoud Ahmadinejad yesterday welcomed a proposal by world powers to defuse a stand off over Tehran's nuclear activity as a positive step but gave no sign when an answer would come.

Mr Ahmadinejad, markedly more upbeat about the proposal on a trip abroad than he has been at home, said Iran was examining the offer of incentives for Tehran to stop enriching uranium, a process that could eventually yield atomic bombs.

He also warned Iran would not be concerned by possible sanctions if it rejects the June 6 offer.

Washington confirmed on Thursday that penalties originally put into the package were left out when it was handed to Tehran.

This was to coax Iran to say "yes" and keep Russia and China united with Western powers behind the approach, diplomats said. Both states are big trade partners of Iran and oppose sanctions.

Iran would get trade and technology benefits if it halts enrichment work for a period possibly lasting years under the offer from the United States, Britain, France, Russia and China - the UN Security Council permanent members - and Germany.

The freeze would be required to establish trust that Iran wants nuclear energy only for electricity, as it insists, not arms as the West suspects. The offer leaves open the possibility of subsequent enrichment in Iran under strict monitoring.

Mr Ahmadinejad condemned the proposal as it was being drafted as tantamount to Iran accepting "candies for gold" but said during a visit to China the offer was a "step forward".

"My colleagues are carefully considering the package of proposals offered by the six countries to the Islamic Republic of Iran and in due time they will give the response," he told a news conference in Shanghai through a translator.

In Washington, US Energy Secretary Sam Bodman told reporters that Mr Ahmadinejad's comments were "encouraging".

Oil prices slid towards $69 a barrel on the Iranian President's comments as fears of a supply squeeze eased. Iran is the world's fourth biggest oil exporter.

European Union leaders, at a summit in Brussels, urged Iran to give "an early positive response" to the package.

But Mr Ahmadinejad deflected queries about when Iran would respond and what its counter offers might be.

In Iran, final decisions on key matters of state rest with Supreme Leader Ayatollah Ali Khamenei, not the president. Mr Khamenei said on Thursday that nuclear fuel development "is among (our) prominent and main objectives".

Iranian Deputy Foreign Minister Seyed Abbas Araghchi repeated that Iran would like to negotiate but not under the six powers' precondition that uranium enrichment stops first.

Western officials fear Iran may stall a decision past an unofficial July deadline to buy time to perfect enrichment technology and expand the programme to make it a fait accompli.

In Washington, US national security adviser Stephen Hadley told reporters that EU foreign policy chief Javier Solana did not threaten penalties when he presented the package to Tehran.