President Mahmoud Ahmadinejad on Sunday instructed Iran's Atomic Energy Organisation to start work on producing nuclear fuel for a Tehran research reactor, casting doubt on the prospects for a swap deal with the West.

'I (ask) Dr Salehi to start work on the production of 20 per cent fuel using centrifuges,' Ahmadinejad said in a televised speech, referring to Ali Akbar Salehi, who heads the atomic energy body. But he added: 'The doors for interaction are still open.'

Ahmadinejad also said Iran had the capability to enrich uranium using laser technology, without elaborating.

On Saturday, the United States and Germany said they saw no sign Tehran would make concessions on its nuclear programme, despite upbeat comments from Iran's foreign minister over prospects for a deal.-Reuters