Six world powers made "substantive progress" but failed to reach an accord on a U.N. resolution to punish Iran for its nuclear program, the French Foreign Ministry said after closed-door talks in Paris on Tuesday.

"We made substantive progress on the scope of the sanctions targeting proliferation-sensitive activities. There remain several outstanding issues, upon which we will reflect over the coming days," the ministry said in a statement. "We are now close to a conclusion of this process."

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The talks brought together diplomats from the United States, Britain, China, France and Russia — the permanent members of the U.N. Security Council — as well as Germany and a representative of EU foreign policy chief Javier Solana.

They were divided, however, over how to punish Iran's defiance of U.N. demands to stop its nuclear program, and faced a new threat from Tehran of retaliation if they opted for sanctions.

The United States and France have expressed hope that the Paris talks would secure agreement for imposing sanctions against Iran. But Russian Foreign Minister Sergey Lavrov said earlier that imposing wide-ranging sanctions would be "irresponsible."

Iranian President Mahmoud Ahmadinejad vowed Tuesday to stick by the nuclear program and issued a new threat to downgrade relations with the 25-nation EU if European negotiators opted for tough U.N. sanctions. He gave no details on how ties might be downgraded. The EU is Iran's biggest trading partner.

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