Iran's Ahmadinejad sends letter to Germany's Merkel

TEHRAN, July 19 (Reuters) Iranian President Mahmoud Ahmadinejad has written to German Chancellor Angela Merkel, the ISNA students news agency reported on Wednesday, but the contents of his letter were not immediately clear.

A German diplomat confirmed the report but the Iranian Foreign Ministry was not immediately available to comment on the contents of the letter to one of Iran's leading trade partners.

Germany's relations with Ahmadinejad have been complicated by his denial of the Holocaust in which six million Jews were killed.

Iran is facing action at the U N Security Council over suspicions that it is developing nuclear arms. Tehran denies the charge, saying it is working on nuclear fuel only to run power stations.

Germany joined the United States, Britain, France, China and Russia in backing a package of incentives that would offer technical and commercial incentives to Iran if Tehran were to halt uranium enrichment.

However, Iran did not reply to the package quickly enough to head off calls for action at the Security Council. Tehran says it hopes to reply by August 22.

There was no hint of whether Iran's stance would be reflected in Ahmadinejad's reply to Merkel.

Oil markets fell sharply when Ahmadinejad wrote a letter to U S President George W Bush, sensing the letter could defuse the nuclear dispute.

However, markets recouped their losses when the rambling letter transpired to focus on religious philosophy and took a chastising tone.

REUTERS PKS HT0000