Iran has rejected a U.S. offer to hold direct talks regarding the situation in Iraq. Following meetings with Iraqi leaders in Baghdad Friday, Iranian Foreign Minister Manouchehr Mottaki said his country had changed its mind about the talks, saying Washington had raised what he called "other issues."

A U.S. State Department spokesman, Sean McCormack, said the United States would still like to discuss the situation in Iraq with Iranian leaders. He said the talks were a viable option and an open channel for either country as needed.

The Iranian foreign minister also warned the Bush administration the United States would face a retaliatory strike if it mounted any attack on the Islamic republic.

His comments come one day after President Bush said it was "incredibly dangerous" to think of a nuclear-armed Iranian state.

Meanwhile, Iraqi Foreign Minister Hoshyar Zebari has endorsed Iran's pursuit of the technology needed to develop nuclear energy.

In a news conference following talks with Iran's foreign minister, Zebari emphasized Iraq does not want any of its Middle East neighbors to obtain nuclear weapons. He stressed, however, Iran's right to possess the scientific knowledge needed to create a peaceful atomic energy program.

U.S. and European leaders are calling on Iran to stop its enrichment of uranium, a key ingredient for atomic energy as well as nuclear weapons.

Washington says Tehran is using the program as a cover for developing a nuclear arsenal. Iran says it has the right under the Nuclear Non-Proliferation Treaty to develop civilian nuclear technology, and its program is for peaceful purposes.

Some information for this report provided by AP, AFP and Reuters.