LAPPEENRANTA, Finland - Despite mounting U.S. pressure for sanctions against Iran, the European Union said Friday it is too early to punish Tehran for its failure to halt uranium enrichment by the U.N. Security Council's deadline.

The call for renewed diplomacy came as Iran's president vowed never to give up a nuclear program that he said is being misrepresented by the West.

"Exploitation of peaceful nuclear energy is our obvious right. We will never give up our legal right," state TV quoted President Mahmoud Ahmadinejad as telling a rally in Maku, Iran. "The West's claim that Iran is pursuing nuclear weapons is a sheer lie."

Iran ignored the Security Council's Thursday deadline to suspend uranium enrichment, opening the way for consideration of economic or other sanctions against the Islamic republic, which the U.S. and others suspect is trying to develop atomic weapons.

President Bush said Thursday that "there must be consequences" for Iran's defiance, saying "the world now faces a grave threat from the radical regime in Iran."

But EU leaders cautioned against pushing a confrontation.

"This is not the time or place" for sanctions, Finnish Foreign Minister Erkki Tuomioja, whose country holds the rotating EU presidency, said after a meeting of the bloc's foreign ministers. "For the EU, diplomacy remains the No. 1 way forward."

The EU as a whole has been a moderate voice on the Iran issue. However, Britain and France support tough action, while Germany is also believed to back that stance.

And the bloc stressed Iran will not be given unlimited time to resolve Western suspicions about its nuclear aims and demands for strengthened international supervision of its atomic program.

The EU's foreign policy chief, Javier Solana, said he would meet with Ali Larijani, Iran's top nuclear negotiator, in the coming days, likely in Europe.

"That does not mean that Iran has indefinite time," Solana told reporters. "We hope that at the next meeting, or couple of meetings, we have enough knowledge (about Iran's position) to see if formal negotiations can start."

John Bolton, U.S. ambassador to the United Nations, said the Security Council would wait to consider possible actions until after Solana met with Larijani.

In Moscow, Russian Foreign Ministry spokesman Mikhail Kamynin expressed regret that Iran ignored the U.N. deadline. But Russian news agencies said Foreign Minister Sergey Lavrov felt strong sanctions would be counterproductive in trying to get Iran to cooperate.

Russia and China, which as permanent members of the Security Council can veto its actions, have generally opposed punishing Iran. Trade sanctions could cut off badly needed oil exports to China, and Russia is helping Iran build a nuclear reactor.

The other three permanent members ¡ª the United States, Britain and France ¡ª have taken a tougher line.

British Foreign Secretary Margaret Beckett said she expected officials from the five permanent council members and Germany to meet soon to discuss the situation. Those six nations have offered a package of economic incentives seeking to entice Iran into giving up uranium enrichment.

"Our goal remains a negotiated solution on the basis of far-reaching proposals" in the package, Beckett said in a statement.

French Foreign Minister Philippe Souste-Blazy said the offer of economic incentives remained on the table. "I repeat our readiness to have a lucid, responsible and transparent dialogue. We are holding out our hand."

The International Atomic Energy Agency, a U.N. watchdog agency, formally told the Security Council on Friday that three years of IAEA probing had been unable to confirm "the peaceful nature of Iran's nuclear program" because of lack of cooperation from Tehran.

Iran denies it is trying to acquire atomic weapons in violation of its commitments under the Nuclear Nonproliferation Treaty. It says its nuclear program is peaceful, with the sole aim of producing electricity with nuclear reactors.

Frank-Walter Steinmeier, the German foreign minister, said it was crucial that the "Security Council and its member states do not allow themselves to be divided by this conflict" with Iran.

But comments by a conservative Iranian cleric hinted Tehran may be counting on divisions to avert sanctions.

"The U.S. supports sanctions, but we hope others will use their wisdom," Ayatollah Ahmad Jannati said during his Friday prayer sermon. He described Russia and China as "independent" and said that "Europe should be independent and not follow the U.S."

U.S. and European diplomats have said they are focusing on low-level punishment at first to win backing from Russia and China.

Sanctions could include travel bans on Iranian officials or a ban on the sale of dual-use technology to Iran. Russia and China are expected to resist heavier measures, like trade sanctions.