Negotiations at the UN atomic agency went down to the wire Thursday to overcome divisions among world powers over a response to the Vienna-based body's damning new report on Iran's nuclear programme.

The International Atomic Energy Agency (IAEA)'s board of governors was expected during two days in talks to condemn Iran in strong terms and set a March deadline to respond to its concerns, diplomats said.

Diplomats were still haggling over the final wording, however, with agreement from "a large country in the UN Security Council" still outstanding, one Western envoy said as ambassadors went into the meeting in Vienna.

"If it comes out in the form it does, which I think it will do, I think we have managed actually find something to pretty much please everyone," another Western diplomat told AFP.

The resolution will call for "a meaningful response" by Iran by the next board meeting in March, the envoy added.

Last week, the agency came the closest yet to accusing Iran outright of seeking to develop nuclear weapons, in a report immediately rejected by the Islamic republic as "baseless."

Based on a mass of information from different sources, the IAEA said it was able to build an overall "credible" impression that Tehran "carried out activities relevant to the development of a nuclear explosive device."

The evidence included a bus-sized steel container visible by satellite for explosives testing and weapons design work, including examining how to arm a Shahab-3 missile, capable of reaching Israel, with a nuclear warhead.

Iranian Foreign Minister Ali Akbar Salehi said on Wednesday Tehran would send "an analytical letter with logical and rational responses" to the report.

But the report laid bare deep differences within the so-called P5+1 bloc dealing with the Iran question, the five permanent members of the UN Security Council -- the United States, China, Russia, Britain, France -- and Germany.

Washington, Paris and London jumped on the IAEA report as justification to tighten the screws on Iran, already under four rounds of Security Council sanctions, and additional US and European Union restrictions.

But Beijing, which relies heavily on Iranian oil imports, and Moscow, which also has close commercial ties and built Iran's only nuclear power plant, have been far more cautious.

Both put pressure on IAEA chief Yukiya Amano not to even publish the report, which Moscow said contained nothing new -- even comparing it to the false intelligence used to justify the US-led invasion of Iraq in 2003.

"The Russians and Chinese are in a bad mood, particularly because of what they perceive as a misuse of the last UN Security Council resolution on Libya," Oliver Thraenert of the German Institute for International and Security Affairs said.

An IAEA resolution only needs a simple majority to pass, unlike in the Security Council where the "big five" can each cast a veto, as Russia and China did over a resolution condemning Syria's crackdown on protestors in October.

So if the two sides fail to see eye to eye, one option may be an IAEA resolution passed without Russian and Chinese support, in what could be a watershed split.

"I think this would backfire and in the long run not be a good idea," Thraenert said. "It wouldn't help in terms of a new resolution in the Security Council."

Israel, meanwhile, will be watching closely, following speculation that it might launch a pre-emptive strike on Iran in an attempt to knock out its arch foe's nuclear facilities.

Israel's Barak 'not very optimistic' on Iran sanctions
Jerusalem (AFP) Nov 17, 2011 - Israeli Defence Minister Ehud Barak said on Thursday, ahead of a meeting of the UN nuclear watchdog, that he was "not very optimistic" about the prospects of strong new sanctions against Iran.

"I'm not very optimistic -- there are difficulties in mobilising will in the world. That's why we're working to convince foreign leaders to impose strong and concrete sanctions to stop Iran," Barak told Israeli public radio.

Speaking from Ottawa, where he is on a visit, Barak said that Iran's nuclear programme "is not directed solely at Israel, but against the entire world order".

"Today there is an important meeting of the International Atomic Energy Agency in Vienna, and we should not appear to be a country that whines, that is afraid, but simply stress that Iran has launched a challenge to the whole world... and the world must move," Barak said.

"No option should be taken off the table, which is also the position of the Europeans and Americans, but I think that I should not say anything more at this stage," Barak added in an interview with Israeli army radio.

The IAEA board was due to begin a two-day meeting at its headquarters in Vienna on Thursday, with Iran's nuclear programme expected to top the agenda.

After a damning report from the body that said there was "credible" information Iran was carrying out "activities relevant to the development of a nuclear explosive device," the meeting was expected to produce a resolution criticising Tehran.

But the international community, and particularly the five veto-wielding permanent members of the Security Council, remain divided over the report and how to respond to it.

Britain, France and the United States jumped on the IAEA report as justification to tighten the screws on Iran, already under four sets of UN sanctions, and additional European Union and US restrictions.

But China, which relies heavily on Iranian oil imports, and Russia, which also has close commercial ties and built Iran's only nuclear power plant, have been far more cautious.