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"My first choice is to solve this diplomatically", said Bush, speaking at a news conference with German Chancellor Angela Merkel in Meseberg, Germany, adding, "all options are on the table."

Iran, meanwhile, is transferring billions of dollars from European banks to Iranian and Asian financial institutions, as well as buying gold and equities, The New York Times reported.

Iranian President Mahmoud Ahmadinejad ordered the asset transfer, the country's newspapers reported Tuesday. Mohsen Talaie, deputy foreign minister for economic affairs, Mohsen Talaie, was quoted as saying, "We decided to exchange our foreign assets to increase our security."

Bush and EU ministers issued a statement urging Iran to "comply with its international obligations concerning its nuclear activities" and reaffirmed a commitment to incentives and sanctions on Iran. Javier Solana, the European Union's foreign policy head, is to visit Tehran to present a package of incentives.

Analysts said the communique's language is designed to ease tensions over Iran's suspected research into nuclear weapon development.

"I think this was a European attempt to show the Bush administration that Europe takes the threat seriously and to try to continue to prevent a situation where Israel or the United States might turn to the military instrument", Julianne Smith of the Center for Strategic and International Studies in Washington told the Times.

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