EU negotiators Britain, France and Germany want Iran to abandon enrichment as a guarantee against it developing nuclear weapons and are offering in return trade concessions and other rewards.

"There is some very hard haggling going on," a senior European diplomat close to the talks told AFP.

Iran said Tuesday it had already gone far enough in providing "objective guarantees", insisting that its nuclear intentions are peaceful and warning that an EU refusal to accept this would bring negotiations to a dead-end.

Ali Agha Mohammadi, a spokesman for Iran's Supreme National Security Council, said in Tehran that "the Europeans should give their guarantees" that Tehran can continue with fuel cycle work, which the Islamic Republic says is permitted by the nuclear Non-Proliferation Treaty (NPT) if for peaceful purposes.

Iran insists its nuclear programme is purely meant to meet civilian electricity needs.

However, the United States says Iran is trying to covertly develop nuclear weapons and wants to bring Tehran before the United Nations Security Council for possible sanctions.

US President George W. Bush on Wednesday defended pressuring Tehran about its nuclear programs after a media report that US intelligence on Iran's atomic ambitions is too weak to draw firm judgments.

"I think it's very wise for the free world to be concerned about the Iranians' desire to develop a weapon," Bush said during a joint appearance at the White House with visiting Romanian President Traian Basescu.

Bush said European leaders were also "worried about Iranian intentions" and stressed: "One reason there needs to be worry about Iran is that this is a nontransparent society. There's no openness."

The European trio, which is seeking to defuse the Iranian crisis with diplomacy rather than confrontation, began this round of talks on Tuesday in Geneva by discussing the potential political and security benefits for Iran.

The talks on the nuclear dossier, the key to agreement on any other matters, began Wednesday and will continue Thursday, a diplomat close to the negotiations told AFP.

The diplomat said the whole process may be in a state of limbo until after Iranian presidential elections in June decide whether pragmatists like former president Akbar Hashemi Rafsanjani or Revolutionary Guard hardliners take power.

"One side may be prepared to make a deal. Another side may want a bomb at all costs," the diplomat said.

A second senior European diplomat said the negotiations "certainly are tough but the Iranians will never make a concession even at the 11th hour. They will wait for the very last minute or seconds."

The diplomat said the Europeans had known going into the talks, which started in December after Iran had agreed to suspend uranium enrichment temporarily as a confidence-building measure, that they might fail.

"March is the first crunch time," the diplomat said, noting that the Iranians have said they want to see progress some three months into the talks or they will resume enrichment.

The first senior diplomat said: "Iran has something it knows we want (abandoning enrichment) and wants to see us up our offer. It clearly feels that World Trade Organization (membership), airplane spare parts or whatever are just not enough," referring to rewards for Iran so far mentioned in the talks.

The diplomat said the talks may in the coming months reach a point "where it is very clear that the Americans need to come on board if Iran's demands are to be satisfied... because essentially Iran's biggest security concern and biggest economic concern is the United States," which has tough economic sanctions against the country.

The United States, whose backing is needed for concessions such as letting Tehran into the WTO, has become more open to helping the EU offer incentives to Iran.

Iran clearly would like Washington to do more and both lift its sanctions and release Iranian assets currently frozen in the United States.

"Tehran is gradually beginning to appreciate that it cannot be part of the global economy without American approval," analyst Ray Takeyh wrote in the International Herald Tribune on Tuesday.