Six world powers have agreed to express their "deep concern" about Iran's nuclear programme in a show of unity at a meeting of the UN atomic agency, diplomats said Tuesday.

The US, China, Russia, Britain, France and Germany are "deeply concerned that Iran continues to undertake certain nuclear activities" in contravention of UN Security Council resolutions, according to a draft seen by AFP.

The statement from the five permanent members of the UN Security Council and Germany was due to be given at a closed-door meeting of the International Atomic Energy Agency's 35-nation board of governors in Vienna on Wednesday.

They also say it is "essential and urgent" for Iran to engage with the IAEA over alleged efforts towards developing nuclear weapons, mostly before 2003 but possibly ongoing.

Ten meetings between the IAEA and Iran since the release of a major November 2011 report by the agency on these allegations have been fruitless.

IAEA head Yukiya Amano said on Monday that the two sides were "going around in circles".

Iran denies pursuing the bomb and says that UN Security Council resolutions calling for a suspension of the most sensitive parts of its nuclear programme are illegal.

Tehran maintains the activities are for energy purposes and for medical isotopes.

The IAEA's latest quarterly report on Iran, circulated on May 22, showed it continuing to build up its capacity to enrich uranium, which in highly purified form could be used in a nuclear weapon.

The IAEA report also detailed advances by Iran building a new reactor at Arak which could provide Tehran with plutonium -- an alternative to uranium for a bomb -- if the reactor fuel is reprocessed.

The six powers, known as the E3+3 or the P5+1, are also involved in diplomatic efforts parallel to those of the IAEA.

The last round in April in Kazakhstan "enhanced mutual understanding of the concerns of both sides" but the two sides "remained far apart on the substance," according to the new statement.

It said they wanted a "positive response from Iran to their package proposal, for an initial confidence-building step, which could serve as a good basis to narrow down differences through further dialogue."

US sanctions go after Iran's currency, auto sector
Washington (AFP) June 3, 2013 - The United States unveiled aggressive new sanctions against Iran Monday, directly targeting the rial currency for the first time and also the auto sector, a key source of jobs and revenue.

The measures, which could wreak more economic deprivation inside Iran, came days before a presidential election in the country and followed Tehran's refusal to cede ground in stalled world power talks on its nuclear program.

They were accompanied by new US warnings of a "painful" and "powerful" escalation of the sanctions regime, as President Barack Obama seeks to convince the Islamic Republic the price of uranium enrichment is too high.

"The steps taken today are part of President Obama's commitment to prevent Iran from acquiring a nuclear weapon, by raising the cost of Iran's defiance of the international community," White House spokesman Jay Carney said.

Obama signed an executive order authorizing sanctions on foreign banks and financial institutions that make transactions in the rial or keep accounts denominated in the currency outside the country.

The ninth set of sanctions signed by Obama against Iran will also penalize anyone involved in the significant sale of goods and services to Iran's auto industry -- a move that could hit foreign car giants in Europe and Asia.

Another official said the strategy represented a significant escalation of the sanctions as, for the first time, Washington was attacking the rial, which has lost two-thirds of its value over the last two years.

"This promises to make Iran's weak currency even weaker and more volatile," the official said. "The idea here is to make the rial essentially unusable outside of Iran."

Analysts said the new move by Obama was a sign that the administration was wedded to a strategy of ever increasing economic pressure on Iran as the showdown over its nuclear program hits a critical point.

"It's a serious escalation of sanctions because the administration is blacklisting the auto sector which is the second largest employer in Iran after the energy sector," said Mark Dubowitz, of the Foundation for Defense of Democracies.

Dubowitz also said that the move against the auto sector was a sign the administration was concerned it could be used to procure "dual use" technologies that could be used in centrifuges enriching uranium.

The announcement of new sanctions came as the campaign gathers pace ahead of June 14 elections to succeed President Mahmoud Ahmadinejad.

While the campaign has featured debate on the economic pain exerted by US and international sanctions, the poll is unlikely to alter Iranian nuclear policy, which is controlled by Supreme Leader Ayatollah Ali Khamenei.

All presidential hopefuls -- including Iran's top nuclear negotiator Saeed Jalili -- have insisted that the nuclear project will proceed whoever wins.

The United States has warned that it will not rule out military action against Iran's nuclear program and that time is running out for diplomacy to succeed.

Talks between Iran and the permanent five members of the UN Security Council plus Germany are on hold pending the election.

Iran denies that its nuclear enrichment activities are intended to produce a nuclear bomb and says the program is purely intended for power generation.

A US official warned Iran must address the international community's concerns or "face ever more powerful sanctions, ever more painful economic hardship and ever increasing isolation."

But Karim Sadjadpour, an Iran analyst with the Carnegie Endowment for International Peace, said that although the new measures could cause significant hardship for Iranians, they were not a game changer.

"I don't see them giving Ayatollah Khamenei existential angst," he said.

"Middle and upper class Iranians who can no longer buy Mercedes, Peugeot, and South Korean automobiles will be inconvenienced and offended by this edict, but I don't see them taking to the streets because of it."