TEHRAN, Oct 24: Iran on Sunday rejected a European Union proposal that it scrap uranium enrichment in return for nuclear technology, increasing the likelihood it will be reported to the UN Security Council for possible sanctions.

But Tehran said it was still interested in reaching a deal to ease international concerns about its nuclear programme after further negotiations with the EU.

"The EU proposal is unbalanced ... an indefinite uranium (enrichment) suspension is unacceptable for Iran," Foreign Ministry spokesman Hamid Reza Asefi told a news conference.

Diplomats had said if Iran rejected the proposal drafted by Britain, Germany and France, most EU countries would back a US demand that Tehran be reported to the Security Council when the International Atomic Energy Agency (IAEA) meets on Nov 25.

Hossein Mousavian, one of Iran's top negotiators on the nuclear issue, acknowledged that was a possibility. "Iran has fully prepared itself for the possible consequences," he told Reuters.

The EU trio want Iran to halt uranium enrichment since it can be used to make nuclear bomb material. Iran says it wants to make the fuel for nuclear power stations and should be allowed to enrich uranium under close UN supervision.

Mr Asefi said Iran expected the EU trio to sweeten its offer. A second round of talks is due to take place in Vienna this week.

"We view the European offer as a preliminary proposal, not a final one," he said. "Negotiations will continue on Wednesday. We will have our own suggestions and we will study the Europeans' proposal and will give the Europeans the results."-Reuters