"If they are ready to engage with us, we're ready to cooperate with them," said Swedish Foreign Minister Carl Bildt, whose country holds the EU presidency, as he arrived at the talks in Stockholm.
"But if they decide to go for confrontation, then confrontation will happen," he told reporters.
Swedish Prime Minister Fredrik Reinfeldt, speaking at a separate press conference, said Europe needed to remain united in its opposition to Iran's nuclear program.
"I think it's very important for us to be gathered firmly in the EU's reaction towards Iran, not accepting nuclear ambitions," he said.
Germany's deputy minister for foreign affairs, Guenter Gloser, however, said it was pointless to impose more sanctions on Iran, pointing out that such actions in the past had yet to bring about any positive change.
"But something must be done to prevent a nuclear arms race in the Middle East," he added.
Iran says nuclear endeavors are peaceful
A defiant President Mahmoud Ahmadinejad said on Thursday that Iran is ready for more sanctions over its nuclear program and will not bow to pressure in meeting any deadline set by world powers.
However Tehran has also said it was willing to begin fresh talks with the six major powers - Britain, China, France, Russia and the United States, plus Germany - regarding its nuclear drive.
Iran continues to insist its nuclear work is peaceful, while Western countries suspect that Iran is attempting to build atomic weapons.
The UN Security Council has already slapped three rounds of sanctions on the Islamic republic, but pressure is growing for more.
Minister appointment further "provocation"
Meanwhile, Reinfeldt called President Ahmadinejad's appointment of international terror suspect Ahmad Vahidi as defense minister a sign of a desire to worsen relations between Iran and the West.
"We feel this is a situation that simply returns to provocations. The appointment of [Vahdi] is another one of these examples," Reinfeldt told reporters.
Vahidi is wanted by Interpol in connection with a 1994 attack on a Jewish charity that killed 85 people.
Editor: Chuck Penfold