CONSTRUCTIVE TALKS

Larijani said: "We had constructive negotiations. It is a framework for cooperation.

His comments were broadcast on state television as he stood next to Solana.

"We view the European countries' determination for resolving the issue through negotiation as a correct step and we welcome it," Larijani said.

On arriving in Iran on Monday, Solana said: "The proposal we bring ... we think that will allow us to get engaged in that negotiation based on trust and respect and confidence."

The United States has said Iran's negative comments before the proposal was made were probably part of efforts to stake out a negotiating position. It has urged careful consideration by the Islamic Republic, with which it broke off diplomatic ties in 1980.

Details of the proposal have not been announced, but diplomats have been working on themes ranging from offering nuclear reactor technology to giving security guarantees.

The New York Times reported that incentives included a proposal to allow Tehran to purchase aircraft parts from Boeing and Airbus and to buy agricultural technology from the United States, which imposes trade sanctions on Iran.

Diplomats in Washington said an arms embargo against Iran was among the possible penalties if it rejected the offer.

But they said the six powers had pledged to keep details secret until the package was shown to Iran so Tehran did not feel compelled to reject any or all of the elements as a face-saving gesture if they were made public first.

The nuclear dispute has unsettled jittery oil markets, where traders fear an escalation in the dispute could disrupt supplies from the world's fourth largest oil exporter. The standoff has helped keep oil prices near record levels above $70 a barrel.

Although the United States insists it wants a negotiated resolution to the nuclear standoff, U.S. officials have refused to rule out a military option if diplomacy fails.