Paris ? Six world powers made “substantive progress” but failed to reach an accord Tuesday on a U.N. resolution to punish Iran for defying demands to halt its nuclear program, the French Foreign Ministry said after talks in Paris.

Tehran made a new threat of retaliation if the powers opted for sanctions.

“We made substantive progress on the scope of the sanctions targeting proliferation-sensitive activities. There remain several outstanding issues, upon which we will reflect over the coming days,” the French ministry said in a statement. “We are now close to a conclusion of this process.”

The talks brought together diplomats from the United States, Britain, China, France and Russia – the permanent members of the U.N. Security Council – as well as Germany and a representative of EU foreign policy chief Javier Solana.

After months of diplomatic wrangling, the United States and France had hoped Tuesday’s talks would produce a resolution imposing sanctions on Iran for defying an Aug. 31 U.N. deadline to halt uranium enrichment. Western powers accuse Iran of seeking nuclear bombs, while Tehran insists it only wants nuclear energy.

The five permanent U.N. Security Council members plus Germany remained split over key questions of visa bans and asset freezes for Iranians linked to nuclear development, which Russia is resisting, according to a top European diplomat who spoke on condition of anonymity because of the sensitivity of the talks.

The discussions now move to the United Nations in New York. The Americans and Europeans are pushing for a resolution by the end of the year.

“We are coming up to the time (when) the credibility of the U.N. is at stake,” U.S. State Department spokesman Sean McCormack said in Washington before the Paris talks.

Meanwhile, Iranian President Mahmoud Ahmadinejad vowed Tuesday to stick by the nuclear program and issued a new threat to downgrade relations with the 25-nation EU if European negotiators opted for tough U.N. sanctions. He gave no details on how ties might be downgraded. The EU is Iran’s biggest trading partner.

Illustrating the divisions that have tangled the negotiations, Russian Foreign Minister Sergey Lavrov said earlier Tuesday that imposing wide-ranging sanctions would be irresponsible.