US President George W Bush issues Iran warning
The EU and the US have threatened Iran with further sanctions unless it verifiably suspends nuclear enrichment.
The measures were announced after US President George W Bush held talks in Slovenia, during what is expected to be his last official tour of Europe.
The "additional measures" would include "steps to ensure Iranian banks cannot... support proliferation and terrorism", said a joint statement.
Mr Bush said a nuclear-armed Iran would be "incredibly dangerous" to peace.
"They can either face isolation or they can have a better relationship with all of us if they verifiably suspend their nuclear enrichment programme," he said.
"They've ignored the [International Atomic Energy Agency] in the past and therefore they can't be trusted with enrichment."
The US president was speaking during a joint news conference with Slovenian Prime Minister Janez Jansa and European Commission President Jose Manuel Barroso after the leaders' summit at Brdo Castle.
Mr Bush has now arrived in the German capital, Berlin, and is later due to travel to Italy, France, the Vatican and the UK.
The 5,000-word statement urged Tehran not to continue defying a demand from the UN Security Council to stop the enrichment of uranium as part of its nuclear programme.
"We will fully and effectively implement" the existing UN sanctions "and we are ready to supplement those sanctions with additional measures," said the statement.
"We will continue to work together... to take steps to ensure Iranian banks cannot abuse the international banking system to support proliferation and terrorism."
The UN Security Council has approved three rounds of sanctions against Iran. These include asset restrictions and travel bans on Iranian individuals and companies said to be involved in nuclear work.
The sanctions also ban the sale to Iran of so-called dual-use items, which can have either a military or civilian purpose.
Other subjects discussed at the talks included:
a global agreement on climate change, which Mr Bush said could be reached before the end of his presidency in 2009 a call for urgent progress in talks for a world trade deal which Mr Barroso said would be good for developing countries the crisis in Zimbabwe - the leaders urged the UN to send monitors to the country to check on its human rights situation ahead of the 27 June presidential run-off
End business involvement
Correspondents say Washington is now attempting to apply pressure on individual European businesses to take a harder line on Iran.
Barclays Bank, based in the UK, has already responded to such pressure and ended all dealings with Iran's Saderat Bank and Bank Melli, which are on the US list of Specially Designated Nationals.
All US businesses trading with anyone on the SDN list must block their accounts immediately and end any business involvement.
Tehran meanwhile has told Iranian banks to transfer assets and investments from European banks to Iran's central bank.
Observers say the move is not only to escape economic sanctions, but also part of a wider government plan to create a huge pan-Iranian bank run on Islamic principles.
EU foreign policy chief Javier Solana will go to Iran on Sunday with a "refreshed" offer of economic and political incentives.
"Now's the time for there to be strong diplomacy," said Mr Bush during the joint press conference.