Diplomats gathered Tuesday for an emergency meeting of the U.N. nuclear agency to assess Iran's resumption of uranium conversion, but the agency appeared unlikely to report Tehran to the Security Council, AP reported.

Iran on Monday restarted some uranium conversion activities at its nuclear plant at Isfahan after suspending them in November following an agreement with Britain, France and Germany and appeals by the International Atomic Energy Agency.

The three European Union countries have been negotiating with Iran in an attempt to persuade the country to drop its uranium enrichment program and related activities in return for incentives. Their latest offer was rejected last weekend by Tehran.

The three EU countries called Tuesday's emergency meeting of the IAEA's board of governors after Tehran announced plans to resume conversion, the process preceding enrichment. Highly enriched uranium can be used to make weapons; uranium enriched to lower levels is used to produce electricity.

Iran insists its nuclear program is peaceful, but Washington accuses Tehran of covertly trying to build an atomic weapon.

The 35-nation IAEA board could report Iran to the Security Council, which in turn could impose economic or political sanctions. However, a Western diplomat close to the agency said it did not appear that the board was ready to take that step.

"As of now, no one is talking about referral to the Security Council," said the diplomat, who spoke on condition of anonymity because he is not authorized to publicly discuss such issues with the media. "It's at best going to be a warning, but even that is going to take a lot of hard negotiating."

"This is Iran thumbing its nose at a productive approach" by European negotiators, U.S. State Department spokesman Adam Ereli said. But neither Ereli nor White House spokesman Trent Duffy would directly answer questions about whether the United States intends to push for sanctions now.

U.N. Secretary-General Kofi Annan spoke Monday to the newly elected president of Iran, Mahmoud Ahmadinejad, about the country's nuclear program and the negotiations with the three EU nations and "urged restraint and encouraged the continuation of the ongoing process," U.N. spokesman Stephane Dujarric said at U.N. headquarters in New York.

"He hopes both sides will remain engaged in search for an acceptable solution," Dujarric said.

Daryl Kimball, executive director of the Washington-based Arms Control Association, said he thought that "the board should act by making clear that if Iran does not suspend these activities within days or a couple of weeks, they will meet again and refer the case to the Security Council."

Sending Tehran's file there now would have little effect and could even be counterproductive, Kimball said.

"The nationalist push for the Iranian nuclear program may only increase if the case is referred to the Security Council at this point," he said. "It would be unwise not to give Iran the opportunity to change its mind."

But David Albright, a former U.N. nuclear inspector who now runs the Institute for Science and International Security in Washington, argued that Iran's violation of the agreement with the EU countries left them with no choice but to pursue a referral to the Security Council.

"There's so much mistrust of Iran because of what it has done on nuclear facilities in the past that there's little patience for Iran backtracking," he said in a telephone interview from Muenster, Germany, where he is doing research.

Albright argued Iran had failed to give the European offer "a fair reading," saying that accepting it would be economically more beneficial than pushing ahead with the nuclear activities.

"Iran is making several steps that may play well domestically and may sound tough, but could leave Iran extremely exposed to pressures of the international community," he said. "It could get bombed, too. ... It could happen, if this continues."

Iran has insisted it has the right under the Nuclear Nonproliferation Treaty to carry out the entire fuel cycle _ from raw uranium to fuel for a reactor. Europe fears that if Iran can develop fuel on its own, it will secretly produce material for a bomb.

On Monday, work at Isfahan resumed after IAEA inspectors installed cameras and other surveillance equipment intended to ensure no nuclear material is diverted. IAEA chief Mohamed ElBaradei said work had resumed as Isfahan before the surveillance equipment was tested. 

Meanwhile, German Foreign Minister Joschka Fischer said that though negotiations were difficult, they would be continued as long as the agreement reached between Tehran and the three EU countries remained in force.

"We are trying to prevent a negative trend with fatal consequences," Fischer said.