Longtime adversaries Iran and the United States are set to hold talks on Saturday in Muscat on Tehran's nuclear programme. The West has voiced fears Iran is seeking nuclear bombs, an ambition Tehran denies.

"We need a diplomatic solution," German foreign ministry spokesman Christian Wagner told a press conference, while stressing it was a "positive development that there is a channel for dialogue between Iran and the United States".

Trump last month sent a letter to Iran's supreme leader Ayatollah Ali Khamenei urging negotiations and warning of military action if Tehran refuses.

On Wednesday Trump said military action against Iran was "absolutely" possible if talks failed to produce a deal.

Wagner said that Germany "remains extremely concerned about the Iranian nuclear programme... Iran has continuously escalated the situation, significantly expanding enrichment capacities.

"Finding a resolution to this issue becomes increasingly urgent."

Germany was among the countries that struck a historic accord with Iran in 2015 that saw sanctions relief in exchange for limits on the nuclear programme.

Trump, during his first period as president, withdrew from the deal, and tensions between the West and Tehran have repeatedly flared since.

Iran has held several rounds of talks with Germany, France and Britain about its nuclear programme after reviving engagement with the trio, known as the E3, last year.

Wagner said the "shared goal" of the three European powers was to find a solution that "ensures Iran does not develop nuclear weapons, as this would have enormous destabilising effects on the entire region".

The Europeans were "of course" working "in close coordination with the United States on this matter", he added.