Iranian President Mahmoud Ahmadinejad said in China's Shanghai Friday that the six-nation incentive package aimed at getting his country to halt uranium enrichment was a step forward in resolving the dispute over Iran's nuclear program.

"Generally speaking, we're regarding this offer as a step forward and I have instructed my colleagues to carefully consider it," Ahmadinejad told reporters after meeting with Chinese President Hu Jintao on the sidelines of a regional summit in Shanghai.

Iranian President Mahmoud Ahmadinejad, front, listens to speeches at an open session of the Shanghai Cooperation Organization in Shanghai Thursday June 15, 2006. During the session Ahmadinejad invited China, Russia and other Central and South Asian nations to convene a special meeting to boost energy cooperation. [AP]

Ahmadinejad's remark was the highest-level sign that Iran was preparing to negotiate over the package of incentives offered by the Big Five of the UN Security Council, plus Germany.

The proposal called for negotiations, with the US to take part, and other incentives on the condition that Iran freeze its uranium enrichment program.

Iran's leadership, however, has sent mixed signals on how it will respond to the proposals.

Supreme Leader Ayatollah Ali Khamenei vowed Thursday that Iran would never back down on its nuclear program and dismissed the threat of UN Security Council sanctions.

"The Islamic Republic of Iran will not succumb to these pressures," state television quoted Khamenei as saying.

Speaking to Iranian nuclear experts in Tehran, Khamenei said the development of nuclear technology was more important than oil extraction - the source of about 80 percent of Iran's foreign exchange.

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