By Justyna Pawlak and Sebastian Moffett
LUXEMBOURG (Reuters) - Negotiations with Iran over its nuclear program could move forward very soon, the European Union's foreign policy chief said on Monday, as EU foreign ministers met to agree another round of sanctions against Tehran.
The ministers are expected to impose new measures against Iran's banking sector, industry and shipping as part of an attempt to persuade Tehran to scale back its nuclear program by increasing pressure while continuing to offer talks.
"I hope we will be able to make progress very soon," Catherine Ashton, who represents six major powers in their on-and-off talks with Iran, told reporters ahead of the meeting, referring to the resumption of talks.
"I absolutely think there is room for negotiations."
The new measures against Iran mark a significant change of policy for the EU, which has so far focused on targeting specific people and companies with economic restrictions.
It has traditionally lagged the United States in imposing blanket industry bans, wary of punishing citizens while inflicting pain on governments.
But pressure on Iran is already doing significant damage to its economy, in part due to an oil embargo levied by the EU this year and Washington's new financial sanctions. Iran's rial currency has lost a third of its value in the past two weeks.
Iran insists its nuclear work has only peaceful dimensions and has refused in three rounds of talks since April to scale it back unless major economic sanctions are lifted.
But governments in Europe and the United States have refused to do so and, instead, are tightening the financial screws against Tehran as fears grow that the nuclear dispute could envelop the Middle East in a new war.
"We will intensify the pressure and we will continue to do so over the coming months unless negotiations succeed," said British foreign secretary William Hague, in Luxembourg for the ministers' meeting.
Earlier this month, riots broke out in protest against the collapse of the rial currency, which has lost some two-thirds of its value against the dollar in the past 15 months, contributing to inflation that is now running at around 25 percent.
An EU diplomat has told Reuters the new European measures include a ban on financial transactions, with some exceptions for those involving humanitarian aid, food and medicine purchases and provisions for legitimate trade.
In a reversal of existing European policy, the ban will require European traders to apply to their governments for authorization before they can finance any transactions in allowed goods. Previously, the EU's more narrow approach was to allow trade broadly while banning specific products.
Trade will be hampered further by a new ban on Europeans extending short-term trade guarantees.
Ashton last met Iran's chief negotiator Saeed Jalili in Istanbul in September, in talks that her spokesman described as "useful and constructive".
(Reporting by Justyna Pawlak; editing by Luke Baker)