China's foreign ministry said on Thursday that sanctions could not "fundamentally solve" the issue of Iran's nuclear programme and urged further dialogue to resolve the ongoing impasse.
The International Atomic Energy Agency disclosed Tuesday it had found "credible" intelligence showing Iran's interest in nuclear weapons -- the first time the UN nuclear watchdog has so explicitly supported claims initially raised by Israel and the United States.
Hong Lei, a spokesman for the Chinese foreign ministry, said: "Sanctions cannot fundamentally solve the Iran issue. Dialogue and negotiation are the right way out for the Iranian nuclear issue."
The IAEA should clarify the report in a "just and objective" way through stronger cooperation with Iran, Hong added.
The US said on Wednesday it was looking at ways to put "additional pressure" on Tehran following the IAEA report, while Russia ruled out backing new sanctions.
"These are very serious allegations, serious charges, and it's incumbent on Iran to at last engage with the IAEA in a credible and transparent manner to address these concerns," State Department spokesman Mark Toner.
President Barack Obama's administration is "going to consult (with allies and partners) and look at ways to impose additional pressure on Iran," Toner told reporters, adding Washington was considering "a range of options" against the Islamic republic.
"I don't want to rule anything out or anything in," he said, adding that unilateral sanctions were a possibility.
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Meanwhile, France and Britain joined the US call for stronger punishment.
"The pressing task now is that all parties concerned step up diplomatic efforts and push forward the P5+1 dialogue with Iran," Hong said, referring to talks between Tehran and the five permanent UN Security Council members plus Germany.
Iran has been subjected to four rounds of UN Security Council resolutions in retaliation for its nuclear programme, the latest coming in June 2010 in a resolution expanding the arms embargo and barring the country from sensitive activities like uranium mining.
Tehran meanwhile said the country stands "ready for useful and positive talks" on its nuclear program as long as they are held on the basis of equality and respect.
Earlier, President Mahmoud Ahmadinejad had reacted with a more defiant tone, saying Iran "will not budge an iota" on its nuclear program, which he insists is for peaceful ends to produce electricity for civilian purposes.
China and Russia -- key allies of Iran -- have often sought to take a softer stance on the Islamic republic.
In recent years, China and Iran have become major economic partners, thanks partly to the withdrawal of Western companies in line with the sanctions against the Islamic republic.
In July, Iran and China, which now buys about 20 percent of Iranian crude, signed a series of agreements worth $4 billion for infrastructure projects in the water, mining, energy and industrial sectors.