P-85 A new U.S. intelligence report indicates that Irans's nuclear program is peaceful.

TEHRAN, Iran - Iran on Tuesday touted a new U.S. intelligence report as vindication that its nuclear program is peaceful. But it was unclear if the finding would lead to any immediate warming in U.S.-Iranian relations, including on key issues like Iraq.

Iranian officials insisted Washington should take a less hawkish stance and drop attempts to impose new sanctions in light of the report's conclusion that Iran stopped its nuclear weapons program in late 2003 and has shown no signs of resuming.

President Bush ruled out any change in policy. He said sanctions were still needed to force Iran to stop uranium enrichment, which he warned could be used for building atomic warheads someday. France and Britain also said pressure must be maintained on Tehran.

Even Russia, which urges continued negotiations rather than more sanctions, said Iran must open its nuclear program fully to international scrutiny and keep it under control of the U.N. atomic watchdog agency.

Israeli Defense Minister Ehud Barak, meanwhile, disputed the U.S. conclusions, saying Israeli intelligence believes Iran is still trying to develop nuclear weapons.

Israel's prime minister, Ehud Olmert, said that "it is vital to continue efforts to prevent Iran from attaining (nuclear) capability." Israel is believed to have its own arsenal of nuclear weapons, the only stockpile in the Mideast.

David Albright, a former U.N. nuclear inspector and now head of the Washington-based Institute for Science and International Security, said Israel's view meant the military option hasn't been taken off the table by the report.

Albright said Israel is looking not just at Iran's solely military efforts but at its uranium enrichment processes, which have potential military applications. "The situation can become tense if they decided their red line has been crossed," he said.

But Iran is clearly hopeful the unclassified summary of the National Intelligence Estimate, released Monday, will weaken the Western push for new sanctions over Tehran's refusal to obey a U.N. Security Council order to suspend uranium enrichment.

"The U.S. and its allies should accept nuclear rights of the Iranian nation. There is no other way, of course," President Mahmoud Ahmadeinejad said during a meeting with the Swedish ambassador, without directly mentioning the new report, according to the presidency Web site.

Foreign Minister Manouchehr Mottaki said the U.S. will face more failure if it doesn't change its stance. "Our advice is that they correct their mistakes regarding Iran's nuclear issue," he told state television.

Mottaki's spokesman, Mohammad Ali Hosseini, said the U.S. report prove Washington's warnings over the danger of the Iranian nuclear program "are baseless and unreliable."

The report, a dramatic change from past U.S. intelligence assessments that Iran was determinedly pursuing a nuclear weapon, will "certainly undercut any push to get new sanctions," said Suzanne Maloney, a foreign policy senior fellow at the Brookings Institution in Washington.

Russia and China, which have veto power as permanent members of the U.N. Security Council along with the U.S., Britain and France, already were arguing against a third round of sanctions against Iran.

They are likely to push harder for a focus on further negotiations with Tehran to resolve international desires that Tehran agree on ways ensure its nuclear program is not used for developing weapons.

Mohammed ElBaradei, head of the U.N. nuclear watchdog, the International Atomic Energy Agency, urged all sides to "enter without delay into negotiations," saying the U.S. report "should help to defuse the current crisis."

China's ambassador to the United Nations, Wang Guangya, said the U.S. report made the prospect of new U.N. sanctions less likely. "I think the council members will have to consider that, because I think we all start from the presumption that now things have changed."

Still, Russian President Vladimir Putin told the top Iranian nuclear negotiator, Saeed Jalili, that Iran must cooperate fully with the U.N. investigation of the nuclear program.

"We expect that your programs in the nuclear sphere will be open, transparent and be conducted under control of the authoritative international organization," Putin said at the start of a meeting with Jalili in Moscow.

Anthony Cordesman, Mideast expert at the Center for Strategic and International Studies in Washington, said there could be a window of opportunity if the West puts forward incentives for Iran, "such as investment with Europe and the U.S."

But "negotiations will probably grow harder rather than easier in the near future," he said.

That view was echoed by Maloney, who said the report could make both sides less willing to compromise.

"The U.S. doesn't want to be in a supplicant position to Iran ... and if anything the Iranian reaction has been to exult in what they describe as an American mistake," she said.

Movement on the nuclear issue could also become tangled in other disputes between the U.S. and Iran, as Washington tries to stem what it says is increasing Iranian influence in the Middle East.

Last week's U.S.-sponsored Mideast peace conference was widely seen as an attempt to rally Arab moderates to isolate Iran and even try to woo away Tehran's close ally Syria. Iran denounced the meeting.

U.S. officials accuse Iran of supporting Palestinian and Lebanese militants and of arming Shiite militants in Iraq who have been involved in attacks on U.S. forces.

In recent weeks, U.S. military officials said the flow of weapons from Iran to Iraqi Shiite militias appeared to have been curtailed, although the Americans were careful to say it was too early to say whether this represented a change in Tehran's policy.

Iraqi officials say the Iranians pledged to stop the weapons flow during a visit to Tehran last August by Iraqi Prime Minister Nouri al-Maliki.

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Associated Press writers Lily Hindy and Carley Petesch in New York contributed to this report.