Iran's president said Sunday that any European proposal that demanded an end to his country's uranium enrichment activities would be unacceptable.

Iran's President Mahmoud Ahmadinejad listens to questions from the media during a press conference at the D-8 summit for the group of developing nations, Saturday, May 13, 2006 in Nusa Dua, Bali, Indonesia. [AP]

"They (must) know that any proposal that requires a halt to our peaceful (nuclear) activities will be without any value and invalid," President Mahmoud Ahmadinejad said on state-run television. "They want to offer us things they call incentives in return for renouncing our rights."

European governments are seeking to build on a package of economic and political incentives offered to Iran in August last year in return for a permanent end to its uranium enrichment activities.

The Bush administration had been pressing for U.N. Security Council action against Tehran but recently agreed to put such efforts on hold and give time for new European-led attempts to find a negotiated solution.

Iran rejected last year's offer, but the Europeans have continued to try to sweeten the proposal, as well as pushing at the United Nations for measures that could lead to sanctions if Iran refuses.

Washington and its allies fear Iran is trying to develop atomic weapons. But Ahmadinejad insists his nuclear program is only for generating electricity and accuses the West of greedily trying to monopolize nuclear technology.

The Iranian leader spoke a day after returning from a trip to Indonesia, where received a boost from the leaders of Pakistan, Nigeria, Turkey and Malaysia and government ministers from Egypt and Bangladesh. At a meeting on economic cooperation, the eight Islamic leaders released a statement supporting the rights of countries to develop nuclear energy for peaceful purposes.

In Indonesia, Ahmadinejad insisted the world has nothing to fear from his program to enrich uranium, which can be used for generating electricity or in making atomic weapons. The hard-line leader insisted he has cooperated fully with the U.N. nuclear monitor, the International Atomic Energy Agency.

Fears that Iran is trying to build nuclear warheads were aggravated Friday, when diplomats said U.N. inspectors may have found traces of highly enriched uranium on equipment from an Iranian research center linked to the military.

The diplomats, who demanded anonymity in exchange for divulging the confidential information, initially said the density of enrichment appeared to be close to or above the level used to make nuclear warheads.

But later a well-placed diplomat accredited to the International Atomic Energy Agency said the level was below that, although higher than the low-enriched material used to generate power and heading toward weapons-grade level.

"I have not heard that," Ahmadinejad said Saturday when asked about the claims, saying the world had no reason "to become nervous ... The nuclear program of Iran is totally peaceful."