With the threat of new U.N. sanctions looming over Iran, senior European officials met with a ranking envoy from Tehran Friday, in what officials described as an attempt to defuse the crisis over the Islamic republic's refusal to scrap uranium enrichment.

Iran's nuclear defiance — most recently documented in a report by the International Atomic Energy Agency that was sent to the Security Council Wednesday — has set the stage for further council sanctions against Tehran, and a European official warned against undue expectations from Friday's talks.

"It was a stocktaking session," said the European official who — like diplomats agreeing to discuss the meeting with The Associated Press — demanded anonymity because the talks were not public.

Still, they suggested that the meeting was positive in demonstrating a joint effort to try to return to negotiations over Iran's enrichment program in an attempt to stave off further sanctions — and a potential escalation of the crisis.

The Pentagon this week moved two aircraft carriers and seven other ships into the Persian Gulf in a show of force. Iran, meanwhile, has detained at least two prominent American-Iranian citizens.

Friday's session in Brussels, Belgium, was meant to prepare the ground for a Thursday meeting in Madrid between Ali Larijani, Iran's leading nuclear negotiator, and European Union foreign policy chief Javier Solana — their second round of talks in just over a month.

It was attended by Larijani deputy Javed Vaidi and senior civil servants of Britain, France and Germany who report directly to their foreign ministers, said the officials. Also present was a senior Solana aide.

In another hopeful sign, U.S. and Iranian diplomats are scheduled to hold direct talks in Baghdad on efforts to stabilize Iraq. The meeting offers a very rare one-on-one diplomatic forum between the nations, which broke off formal relations after Iran's 1979 Islamic Revolution.

The agenda of the talks is limited to Iraqi affairs and should not touch on the nuclear impasse. But its outcome could influence the chances of success of the Solana-Larijani session in Madrid.

While the two men spoke of progress at their last encounter in Ankara, Turkey, Iran continues to defy a Security Council demand that it immediately suspend all enrichment activities — a stance that threatens to doom all chances of success.

The United States leads opposition to any compromise on enrichment, and the official U.S. stance remains that Iran must scrap all its equipment. Still, a senior diplomat familiar with the issue told the AP Friday that some senior U.S. State Department officials are now willing to contemplate a less stringent definition of what constitutes a freeze.

Such a new definition would allow Iran to keep some machines standing and running without actually feeding them with the uranium gas that — when enriched — can be used either to generate power or create the fissile material for nuclear warheads, said the diplomat. That compromise — plus agreement not to seek suspension before substantive talks begin — might be acceptable to Iran and serve as a basis for new negotiations.

Publicly though, the Americans and their allies are taking issue with recent public suggestions by IAEA chief Mohamed ElBaradei calling for such middle ground and have criticized his suggestions that it is too late to force Tehran to totally scrap its enrichment program as demanded by the Security Council.

"I believe that (U.N.) demand has been superseded by events," ElBaradei told the Spanish newspaper ABC last week.

In Washington, U.S. State Department spokesman Tom Casey said senior U.S., French and British diplomats on Friday registered their "concern" about those remarks in a meeting with ElBaradei, at his Vienna-based organization.

The issue gained in importance Wednesday, when ElBaradei sent a report to the Security Council that says Iran has expanded its enrichment activities instead of freezing them — a finding that could act as a trigger for a third set of sanctions.

Iran's ultimate stated goal is running 54,000 centrifuges to churn out enriched uranium — enough for dozens of nuclear warheads a year.

Although Tehran insists it wants the technology only to generate nuclear power, it has been hit with two sets of U.N. sanctions because of suspicions bred by nearly two decades of Tehran's clandestine nuclear activities, including questionable black-market acquisitions of equipment and blueprints that appear linked to weapons plans.