EU talks with Iran on its nuclear program broke off in failure yesterday, diplomats said, and the UN atomic watchdog said Teheran's behavior posed a serious concern it might gain the ability to build atom bombs.

Diplomats said the meeting between Iranian deputy nuclear negotiator Javad Vaeedi and a top aide of European Union foreign policy chief Javier Solana, to prepare for higher level talks, foundered because Vaeedi would not discuss issues of substance.

"It was a failure," said one diplomat. Another said a planned meeting between Vaeedi and two senior officials of the watchdog International Atomic Energy Agency (IAEA) had been cancelled for the same reason.

The aborted meetings underlined the growing crisis over Iran's nuclear program as Western countries consider whether to push for a third, harsher round of UN Security Council sanctions to try to force Iran to halt enrichment work.

Iranian chief negotiator Ali Larijani promised Solana at a May 31 meeting in Madrid to do more to clear up IAEA inquests into its program. But Teheran said the gesture depended on an end to Security Council action - a nonstarter for world powers.

IAEA director Mohamed ElBaradei told a meeting of its 35-nation board of governors that Iran was raising proliferation fears by significantly expanding its uranium enrichment program while curbing cooperation with inspectors.

"This is disconcerting and regrettable." he said in a downbeat speech opening the weeklong board meeting.

"The facts on the ground indicate that Iran continues steadily to perfect its knowledge relevant to enrichment, and to expand the capacity of its enrichment facility," said ElBaradei.

"This is taking place without the agency being able to make any progress in its efforts to resolve outstanding issues relevant to the nature and scope of Iran's nuclear program."

At the same time, ElBaradei said he was growing alarmed about the "current stalemate and brewing confrontation" between Iran and world powers, which he fears could lead to US-Iranian war inflaming the Middle East without a diplomatic compromise.

For over a year, Iran has limited inspections to declared nuclear sites, barring short-notice visits to other areas to probe indications of undeclared activity with military links.

Source: China Daily/Agencies