Iran indicated it may suspend some unspecified nuclear activities after European powers offered a package of incentives in return for Tehran's promise to permanently give up uranium enrichment (search).

Meanwhile, a scientist said Iranian researchers have developed technology to produce zirconium (search), a key metal used in the heart of a nuclear reactor to produce nuclear fuel.

Iran's top nuclear negotiator, Hasan Rowhani, told state television that Tehran was still studying the offer last week by Britain, Germany and France that included civilian nuclear technology and a trade deal.

"We are trying to choose the best course of work," he said.

The United States contends Iran has a covert program to produce nuclear weapons and has been lobbying for the International Atomic Energy Agency (search) to refer Iran to the U.N. Security Council, which could impose sanctions. The European offer was an attempt to head off a confrontation.

Iran wants "to give European countries guarantees and assurances that it will not deviate in the direction of acquiring nuclear weapons," Iranian Foreign Minister Kamal Kharrazi told reporters in Kuwait.

Iran has said it will never abandon enrichment, a technology that can produce fuel for nuclear reactors as well as nuclear weapons. But on Monday Rowhani suggested some flexibility.

"Indefinite doesn't mean permanent," Rowhani said. "They (the Europeans) called for indefinite suspension as long as talks are under way. They say, for instance, that if negotiations are to last six or seven months, then Iran should not violate the suspension for that period."

He did not elaborate. The country is suspending the actual enrichment of uranium but is continuing with related activities, such as the building of nuclear centrifuges, despite the IAEA's request to stop it.

Iran insists its nuclear activities are peaceful and geared solely toward generating electric power.

Monday brought word of another alleged nuclear-related breakthrough.

"Iranian scientists have achieved the technology to design and produce zirconium, the world's most sophisticated nuclear metal," Mansour Habashizadeh told state-run radio.

Habashizadeh, head of the Iranian Center for Research and Production of Nuclear Fuel in the central city of Isfahan, said the metal is used in the heart of a nuclear reactor and as a nuclear fuel protector.

He gave no further details, and it was unclear what prompted the announcement. He did say that only two important industrialized countries were able to produce the metal.

Zirconium is a grayish-white material that ignites spontaneously at high temperature. A naturally occurring substance, it can be found in the earth's crust, but not typically in large deposits.

Zirconium alloy cladding is also used for nuclear fuel tubes placed in the reactor core at the heart of the nuclear reactor.

Britain, Germany and France have warned that most European countries would back Washington's call to refer Iran's nuclear dossier to the U.N. Security Council if Iran does not abandon all enrichment activities by Nov. 25, when the IAEA board of governors is due to meet in Vienna, Austria.

In London on Monday, British Prime Minister Tony Blair said the world would insist Iran complies with IAEA.

"I don't think dialogue has been exhausted on this," Blair said. "But we do need the Iranians to understand that the international community does not find it acceptable that they develop nuclear weapons."

Iran is to resume talks with Europeans on Wednesday.

On Sunday, Foreign Ministry spokesman Hamid Reza Asefi described the European proposal as "unbalanced," but said they had "chosen the correct path of dialogue."

Rowhani said Iran was cooperating with the IAEA to prove "to the world that the United States lied when it said Iran was covertly seeking nuclear weapons."

"No country can force any other country to stop an activity which is its legitimate right, even for one hour. Therefore suspension, of any extent and duration, will be a voluntary Iranian decision," said Rowhani, who is also secretary of the Supreme National Security Council.

Government spokesman Abdollah Ramezanzadeh said the Cabinet had approved a draft law banning the proliferation, production, stockpiling and use of chemical weapons, and it will be sent to parliament.