In two days of talks in southern Finland, the ministers will also discuss ways to strengthen the European Union's influence in the Middle East -- particularly with Israel, in the wake of its month-long war against Hezbollah.

Iran's nuclear ambitions will take centre stage at the talks, in the town of Lappeenranta near the border with Russia, given Tehran's rejection of a UN Security Council deadline to freeze enrichment activities by Thursday.

Iran's defiance has forced the EU to tread a diplomatic tight-rope; working toward sanctions with the United States without compromising the dialogue, however unsatisfactory so far, with Iran.

"There are two things happening at once," an EU diplomat said late Thursday.

As the deadline passed, EU foreign policy chief Javier Solana, who will brief the ministers on Saturday, sought to keep up diplomatic efforts, agreeing to meet "face-to-face" with Iran's top nuclear negotiator Ali Larijani.

The pair will discuss, perhaps as soon as Wednesday, Iran's 21-page response to an international package of political and economic incentives in exchange for Tehran suspending enrichment.

"It's going to be a clarification meeting and give them the opportunity to explain their response," the diplomat said, adding that the document had been "long and confused."

According to a Western diplomat in Vienna, their talks are to be followed the next day -- September 7 -- by a meeting of Britain, China, France, Germany, Russia and the United States.

Iran maintains that it is exercising its right to develop civilian atomic energy but many fear that it is really trying to build a nuclear bomb, and with the UN deadline now past, Washington believes it is time to act.

Security Council members China and Russia, however, are wavering on sanctions, and could veto any such moves.

Late on Wednesday, Iranian President Mahmoud Ahmadinejad urged the Europeans not to follow the "wrong and aggressive" policies of the United States, which broke diplomatic ties with Iran in 1979, and continue to negotiate.

Friday's talks in Finland, which currently holds the EU's rotating presidency, begin with a working lunch during which the bloc's 25 top diplomats will discuss Israel's relations with Lebanon and the Palestinians.

Following the conflict in southern Lebanon, France and Italy have contributed several thousand troops to a peacekeeping force, increasing the EU's leverage with Israel and, indirectly, the United States.

Taking the lead of the peacekeeping mission is seen as a new step toward making Europe a key player in the Middle East rather than a massive aid donor, even as the EU announced new funds for Lebanon on Thursday.

"I believe that it would be timely to evaluate the EU's role and our own working methods in order to see whether there is something we can do to enhance our impact," Finnish Foreign Minister Erkki Tuomioja told his EU partners.

At the final session of their informal talks, the ministers will on Saturday discuss the Union's ties with nearby Russia as the EU draws up a new legal framework for relations with Moscow, due to be introduced next year.

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