Hailing a deal last month when Iran agreed to suspend uranium enrichment, a key part of the nuclear fuel cycle, the leaders confirmed their aim to sign a trade and cooperation agreement.

Moreover, they "confirmed the Union's readiness to explore ways to further develop political and economic cooperation with the Iran, following action by Iran to address other areas of concern," the draft text said.

Those areas were "the fight against terrorism, human rights and Iran's approach to the Middle East peace process," it added.

Under an agreement reached in Paris last month between Britain, France and Germany, acting for the European Union, and Iran, Tehran agreed to suspend uranium enrichment in exchange for trade, technology and security rewards.

Talks to give it the rewards it is seeking duly began earlier this week.

Uranium is enriched by centrifuges into fuel for civilian nuclear reactors. But, in a highly refined form, it can also be the explosive core of atomic bombs.

The United States claims Iran is covertly developing nuclear weapons, which Iran strongly denies.

Washington would like Iran brought to the UN Security Council for possible sanctions, but is giving the EU initiative a chance.

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