Syria on Friday hotly dismissed a U.N. report linking embattled President Bashar Assad's (search) regime to the assassination of a former Lebanese prime minister, and Damascus geared up to fight growing Western sentiment to punish it with economic sanctions.

President Bush called on the U.N. Security Council to meet as soon as possible to hold Syria accountable for the slaying of former Lebanese leader Rafik Hariri (search) on Feb. 14, saying U.S. officials were talking with U.N. officials and Arab governments about what steps to take.

"The report strongly suggests that the politically motivated assassination could not have taken place without Syrian involvement," Bush said during a visit to Simi Valley, Calif.

The U.N. report is the latest development in what has been an extremely bad diplomatic patch for the authoritarian Syrian regime, which is facing intensifying censure from many parts of the world over its conduct in the Middle East.

The findings were also likely to deepen explosive political divisions between Lebanon's pro- and anti-Syrian groups. Syria's foes there hailed the report as a long-awaited truth-telling about Damascus' complicity in the assassination and its interference in Lebanese affairs. Pro-Syrian politicians vilified the findings.

Hariri's killing in a car bombing in Beirut touched off street protests in Lebanon and heated up international pressures on Damascus, forcing Assad's regime to end a nearly three-decade military occupation of its neighbor.

Syria also has been under increasing U.S. pressure to stop interfering in Lebanon, to shut its border with Iraq to anti-American insurgents and to halt support for Palestinian militant groups. Syria has denied doing any of those things.

"This is the worst period in Syria's modern history," said Hazem Saghieh, a senior Lebanese columnist with the London-based Arabic newspaper Al-Hayat. "I do not rule out a confrontation with the international community and sanctions on Syria."

While the U.N. findings did not directly incriminate Assad, the report cited a witness who said Assef Shawkat, the president's brother-in-law and Syria's military intelligence chief, forced a man to tape a claim of responsibility for Hariri's killing 15 days before it occurred.

The report also said Syrian Foreign Minister Farouk al-Sharaa (search) lied in a letter to the investigating commission.

Assad's government repeated its claim of innocence in the Hariri killing and declared that the U.N. document was heavily politicized because of Syria's staunch anti-Israeli position.

Information Minister Mahdi Dakhlallah said the report lacked hard evidence and was based on witnesses "who are well known for their anti-Syria stands."

The report also said Lebanese intelligence officials helped organize the Hariri killing. It further said Lebanon's pro-Syrian president, Emile Lahoud, got a phone call minutes before the assassination from the brother of a prominent member of a pro-Syrian group who also called one of four Lebanese generals arrested later in the killing.

Lahoud's office issued a statement "categorically" denying that the president received such a phone call. "There is no truth to it," the statement said.

In Washington, Syrian ambassador Imad Moustapha said the accusations were baseless and political. Moustapha blamed the Bush administration, saying "it has never forgiven Syria for its opposition to the war in Iraq."

In Damascus, few Syrians were willing to comment, but those who did took the Assad regime's view of the U.N. report.

"This is a big fabrication," said Basil Deheim, a 26-year-old marketing executive sitting with friends at a packed coffee shop.

"I don't believe it," he added, pointing to a large-screen TV showing continuous coverage of the probe on an Arab satellite channel. No other customer was watching.

In one of the most critical parts of the U.N. report, German prosecutor Detlev Mehlis said Syria must cooperate if the investigation is to succeed. The inquiry, which was ordered by the U.N. Security Council on April 8, was extended for a second time by Secretary-General Kofi Annan -- this time until Dec. 15.

Even before the report, Syria was suffering growing isolation, with an unstated moratorium in place on visits by high-ranking Western officials and the shelving of a European Union-Syria trade agreement. Syria's relations with other Arab countries also have deteriorated..

The drive for sanctions against the Assad regime was under full steam. Earlier this week, a U.S. official and two U.N. diplomats said the United States and France were preparing Security Council resolutions critical of Syria for its role in the Hariri assassination and its alleged arming of anti-Israeli militias in Lebanon.

Sanctions would further weaken Syria's struggling economy. A recent study by the United Nations Development Program and the Syrian government found that 5.3 million of the country's 18 million people live in poverty. Unemployment is estimated to be at least 20 percent.

Joshua Landis, a University of Oklahoma professor who is spending the year in Damascus as a Fulbright scholar, said Syria's political establishment is divided on how to deal with the U.N. report.

He said hard-liners believe Syria is in a strong position, arguing the United States is mired in the Iraqi insurgency and its failure to curb Iran's nuclear program.

Those who are more moderate, he said, contend Washington is succeeding in creating a new order in the Middle East despite problems in Iraq. They also say Syria no longer has any allies and must remake itself by opening up the economy and cooperating with its neighbors, he said.

Landis put Assad in the moderate camp. "He wants to modernize but he wants to keep an authoritarian state structure."