Iran's senior nuclear negotiator said Sunday that "many misunderstandings were removed" in talks with the European Union about his country's refusal to meet U.N Security Council demands that it freeze uranium enrichment.

The European Union's foreign policy chief, Javier Solana, agreed that progress was made in his talks with Iran's top negotiator Ali Larijani, and that talks would continue next week. "The meeting has been worth it," he said.

The talks, which began Saturday after being postponed earlier in the week, were seen as Iran's last chance to avoid penalties for rejecting the Security Council's demands that it stop enriching uranium, which can be used to make nuclear weapons.

CountryWatch: Iran

Both sides also reported progress in talks Saturday, but did not elaborate.

The two sides have been working to seek common ground for negotiations between six world powers and Iran over its nuclear defiance. While the five permanent Security Council members and Germany have demanded that Iran fully freeze enrichment as a condition for further negotiations, Tehran has steadfastly refused to do so.

Iran says it wants to develop an enrichment program to generate power. But there are growing concerns it seeks the technology to enrich uranium to weapons-grade for the core of warheads.

Hopes for success have been slim, but positions appeared to have shifted slightly.

European officials, who demanded anonymity for sharing confidential information with The Associated Press, suggested that at least some of the six nations were ready to listen if Iran committed itself to an enrichment freeze soon after the start of negotiations instead of as a condition for such talks.

The officials declined to provide details. But such readiness would be a blow to U.S.-led attempts to hold fast to the demand that Iran freeze enrichment before any talks — or face the prospect of Security Council sanctions.

One of the officials said Solana discussed the issue with Secretary of State Condoleezza Rice before going into the meeting on Saturday, but declined to offer details. Solana is authorized by the six powers to carry their message and listen to the Iranians, without actually negotiating.

Undersecretary of State Nicholas Burns said Friday that Washington expected the Security Council to start discussing a draft on sanctions as early as next week, unless Tehran agreed at the last minute to halt enrichment.

But there might be opposition to that within the council. Russia and China have resisted a quick move to sanctions even though they agree to them as the ultimate punishment.

Chinese Premier Wen Jiabao urged the international community not to threaten Iran with economic and other sanctions to resolve the standoff.

Wen said Saturday after an EU summit in Finland that diplomacy is a "long process" and added that "to mount pressure or impose sanctions will not necessarily bring about a peaceful solution" to the controversy over Tehran's nuclear ambitions.

"It is our hope that the international community ... will exercise caution on this matter and continue to work for a peaceful solution," he said after a summit meeting with EU officials.

And French Foreign Minister Philippe Douste-Blazy on Thursday appeared to suggest that the demand to stop enrichment before talks was negotiable, saying: "The question is to know at what moment this suspension takes place compared to negotiations."

He later appeared to reverse himself, saying in separate comments that "suspension ... is an absolute prerequisite for restoring trust and resuming negotiations."

A European diplomat told AP such vacillation appeared to reflect that a sizable number of countries within the 25-member EU oppose a quick move to sanctions. Britain, France and Germany formally represent the European Union within the six-nation coalition.

The six powers agreed in June on a package of economic and political rewards for Iran if it stops enrichment before negotiations, which are meant to achieve a long-term moratorium on the activity.

But the international alliance also warned of punishments — including the sanctions — if Tehran does not halt enrichment. Iran refused to do by the U.N.'s Aug. 31 deadline.