Iran faces further sanctions unless it changes stance in talks over its nuclear programme, German Chancellor Angela Merkel said, even if there is no United Nations agreement to act against Tehran.

Iran has ignored US President Barack Obama's end-2009 deadline to respond to an offer from six world powers of economic and political incentives in exchange for halting its uranium enrichment programme.

At a meeting of those countries on Saturday, intended to discuss prospects for further sanctions against Iran, China made clear it opposed more punitive action, at least for now.

'Germany has made clear that if Iran's reaction does not change, we will be working on a comprehensive package of sanctions,' Merkel said at a joint news conference in Berlin with Israeli Prime Minister Benjamin Netanyahu.

'Of course we would prefer it if these (sanctions) could be agreed within the framework of the United Nations Security Council,' she said, adding that officials would be working to that end in the coming weeks.

'But Germany will take part in sanctions with other countries that are pursuing the same goal,' she said.

The European Union, which hosted Saturday's meeting at its New York office, said that despite the lack of concrete outcome, further sanctions were now on the big-power agenda and the six would be in contact again soon to continue the discussions.

The six countries involved in the talks are the US, Germany, France, Britain, Russia and China.

All except China sent top level foreign ministry officials to the meeting. Beijing sent only a mid-ranking diplomat, to the dismay of the four Western countries.

Three previous rounds of UN sanctions have targeted Iran's nuclear and missile industries, but Iran has shrugged them off and said it plans to pursue its right to enrich uranium, which can have both civilian and military uses.

Iran sees progress

Western nations suspect the Islamic Republic will use its atomic technology to develop a nuclear bomb but Tehran says the work is aimed only at generating electricity. It has rebuffed international pressure to halt nuclear fuel enrichment or send its enriched uranium stockpile abroad for refinement.

Iranian Foreign Minister Manouchehr Mottaki said Iran had exchanged messages with major powers on its nuclear energy programme and saw signs of progress.

'There have been ongoing negotiations and messages are being exchanged so we have to just wait. There are some minor signs indicating a realistic approach, so any probable developments or progress can be discussed later,' Mottaki said in Tehran.

Western diplomats said that whenever it has faced a serious prospect of new sanctions, Iran has begun lobbying key powers and made an appearance of offering concessions.

'The credible threat of further pressure does create some leverage over the Iranian system,' one diplomat involved in the talks about sanctions said.

Netanyahu, speaking alongside Merkel in Berlin, said the time had come to apply 'crippling sanctions' against Iran over its nuclear programme.

'If we don't apply sanctions, crippling sanctions against this Iranian tyranny, when shall we apply them? If not now, when? The answer is now,' he said.

Israel, assumed to be the Middle East's only nuclear power, sees Iran's project as a threat to its existence, citing hostile rhetoric against the Jewish state by Iranian leaders.

It has not ruled out using force if diplomatic pressure and economic sanctions fail to stop Iran's nuclear plans. – Reuters