Iran wants new nuclear fuel talks

"We are ready to buy the fuel from any supplier under the full scope of safeguards and surveillance of the IAEA," said Soltanieh, Tehran's veteran ambassador to the atomic watchdog.

"The core issue is the assurance and guarantee of the supply, keeping in mind the past confidence deficit where we did not receive the fuel we had paid for," he said, alluding to supply deals that fell through after the Islamic Revolution.

Iran's foreign minister said Tehran wanted the IAEA to set up a "technical commission" to review the deal.

Iran gave the IAEA an "initial response" to the draft deal on Friday after talks in Vienna on October 19-21 with the three big powers. Diplomats say ElBaradei told Tehran to come back with a full answer and a better proposal.

Western diplomats say Iran has asked to receive fuel for a Tehran reactor making radio isotopes for cancer treatment before shipping out any of its own LEU. Iran also wants to transfer the enriched uranium in small shipments, not in one go.

Diplomats say the Iranian demands are unacceptable because the deal in this form would not lessen Tehran's potential to turn LEU into bomb-grade nuclear fuel if it wanted, a scenario the West fears due to Iran's history of nuclear secrecy.

"The messages from Tehran are negative, I am quite pessimistic," one European diplomat said.

(Additional reporting by Mark Heinrich in Vienna, Louis Charbonneau at the United Nations, Sophie Hardach in Paris and Razak Ahmad in Kuala Lumpur; editing by Andrew Roche)