PARIS - Six world powers made "substantive progress" but failed to reach an accord on a UN resolution to punish Iran for defying UN demands to halt its nuclear program, the French Foreign Ministry said after talks in Paris Tuesday.

Iran's Supreme National Security Council Secretary and cheif neuclear negotiator Ali Larijani speaks during the second day of the Arab Strategy Forum in the Gulf emirate of Dubai. Six world powers meeting in Paris said they had failed to agree what sanctions to impose over Iran's refusal to halt sensitive nuclear work, as diplomats said that Russia was blocking a deal.[AFP]

Tehran made a new threat of retaliation if the powers opted for sanctions.

"We made substantive progress on the scope of the sanctions targeting proliferation-sensitive activities. There remain several outstanding issues, upon which we will reflect over the coming days," the French ministry said in a statement. "We are now close to a conclusion of this process."

Special coverage: Iran Nuke Issue Related readings: Iran: Sanctions would be act of hostility

The talks brought together diplomats from the United States, Britain, China, France and Russia - the permanent members of the UN Security Council - as well as Germany and a representative of EU foreign policy chief Javier Solana.

The United States and France were hoping the Paris talks would secure agreement on sanctions against Iran. But Russian Foreign Minister Sergey Lavrov said earlier that imposing wide-ranging sanctions would be "irresponsible."

Iranian President Mahmoud Ahmadinejad vowed Tuesday to stick by the nuclear program and issued a new threat to downgrade relations with the 25-nation EU if European negotiators opted for tough UN sanctions. He gave no details on how ties might be downgraded. The EU is Iran's biggest trading partner.

The Security Council has been at odds over how to deal with Iran's defiance of an Aug. 31 UN deadline to halt uranium enrichment. Western powers accuse Iran of seeking nuclear bombs, while Tehran insists it only wants nuclear energy.

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