By Edmund Blair
UPDATE 1: EU says Iranian response 'not conclusive', US warns of more sanctions.
Iran and the representative of six world powers talked by telephone on Monday without resolving a row over Tehran's sensitive nuclear work, which the Islamic Republic said would not be stopped.
A European Union official said the telephone call was "not conclusive" and Washington said it expected a written response from Tehran on Tuesday, warning of more sanctions unless it was "positive".
Western officials had set an informal deadline of last Saturday for Tehran to respond to the offer by the powers to refrain from steps to impose more UN sanctions, if Iran froze expansion of its nuclear work.
Iran dismissed the deadline set by Western capitals. Before the call between Iran's chief atomic negotiator Saeed Jalili and European Union foreign policy chief Javier Solana, an Iranian official said Iran would not discuss a freeze.
The West fears Iran aims to build nuclear warheads under cover of a civilian programme, a charge Tehran denies.
In comments likely to stoke tension, Iran's Revolutionary Guards chief said the Islamic Republic had the ability to close the Strait of Hormuz, a vital oil shipping route, if attacked. The Guards also said they had tested a new naval weapon.
Around 40 percent of the oil traded in the world leaves the region through the Strait of Hormuz, a choke point at the southern end of the Gulf flanked by Iran and Oman. Washington has pledged to keep shipping routes open.
The United States has not ruled out military action but insists it wants diplomacy to end the row. Worries about a conflict flaring up have rattled oil markets in the past.
"The phone conversation has not been conclusive. We do not exclude new contacts in the coming days," the EU official told newswire Reuters, adding Solana had been in touch with officials from the United States, France, Britain, Germany, Russia and China.
Iranian state radio said after the call: "They emphasised continuing the course of the Geneva talks. The preservation of this course requires a constructive and positive environment."
It said Solana and Jalili, who last met in person in Geneva in July, were expected to consult again in coming days.
Tehran said it would provide a written reply to the offer on Tuesday, the US State Department spokesman said.
"We agreed in the absence of a clear, positive response from Iran that we have no choice but to pursue further measures against Iran as part of this strategy," he said.
Britain took the same line: "Unless tomorrow's answer is unambiguous and positive, we will have no choice but to proceed with further sanctions measures," a spokesman said.
France's Deputy UN Ambassador Jean-Pierre Lacroix said the six powers would be consulting later on Monday on what to do next. Among the issues is whether Tuesday should be considered a firm deadline for a response to the offer delivered by Solana.
He made clear that if Tehran did not change its approach, Paris would also back further sanctions.
The UN Security Council has slapped three sets of limited penalties on Iran since 2006.
Russia, which opposed setting a deadline for Iran to respond, and China have been more reluctant to impose sanctions but have in the end voted for three such resolutions.
The freeze idea was to get initial talks going before formal discussions on nuclear, trade and other incentives offered by the six powers. But Iran must suspend uranium enrichment, which has military and civilian uses, for formal talks to start.
Iran, the world's fourth largest oil producer, has repeatedly ruled out halting nuclear work that it says is aimed at mastering technology to generate electricity, not make bombs.
"Enrichment is Iran's inalienable right," Foreign Ministry spokesman Hassan Qashqavi told a news conference. "When it comes to our inalienable rights, we will press ahead."
He also brushed off the impact of sanctions.
Economists say Iran has a big cash cushion from windfall oil revenues to cope with sanctions. But the penalties have hurt the economy and added costs for Iranian businesses, they say. Many Western firms have been steering clear of Iran.
Iranian President Mahmoud Ahmadinejad will go to Turkey next week for talks which will cover the nuclear dispute. NATO-member Turkey has good relations with Tehran and the West. (Reuters)