Peugeot Citroen's talks on a manufacturing venture with Iran's biggest carmaker are being undermined by anti-French sentiment in the country, Chief Executive Carlos Tavares said on Wednesday.

Peugeot has "developed proposals" with historic partner Iran Khodro, Tavares said, but progress is being hindered by a backlash over France's tough line during the talks preceding a July 14 breakthrough deal under which sanctions are to be lifted in return for curbs on Iranian nuclear activities.

"The negotiations are taking place in a climate that is fairly hostile to France, because the country's role during the period under sanctions was not appreciated," Tavares said.

Peugeot remains in discussion with other potential Iranian partners, he added. – Reuters