Tone down rhetoric in Iran nuclear talks -- Annan

TOKYO, May 18 (Reuters) UN Secretary-General Kofi Annan today said those involved in negotiations over Iran's nuclear crisis should tone down their rhetoric, a day after the Iranian president slammed an EU proposal as ''candy for gold''.

But Annan said he pinned his hopes on diplomatic efforts, including those by the European Union, to resolve the stand-off centring on Tehran's uranium enrichment programme that the West suspects has military dimensions.

''There is also a need to lower the temperature, and refrain from actions and rhetoric that could further inflame the situation,'' Annan said in a speech to Tokyo university students.

Yesterday, Iranian President Mahmoud Ahmadinejad turned down an expected proposal by Britain, France and Germany, the EU's three biggest powers, to offer Iran a light-water reactor to induce it to freeze uranium enrichment.

''They say we want to give Iranians incentives but they think they are dealing with a four-year-old, telling him they will give him candies or walnuts and take gold from him in return,'' Ahmadinejad said.

The United States and its EU allies are demanding that Iran abandon nuclear fuel activities as a guarantee that it is not trying to make atomic weapons.

But Tehran insists that the fuel is to meet increasing electricity demand and refuses to end enrichment, a process which can also produce materials for nuclear weapons.

Washington and its allies have been seeking to pass a UN Security Council resolution that would require Iran to halt all uranium enrichment work or face possible sanctions.

Annan said Iran must ''lift the cloud of suspicion'' regarding its nuclear activities, but added that he hoped for a diplomatic solution rather than sanctions.

''It is my strong hope that the current discussions in the Security Council will give new momentum to the quest for a negotiated solution,'' he said.

Annan was in Tokyo for talks with Japanese officials including Prime Minister Junichiro Koizumi.

REUTERS SB PM1215