DHAKA: Diplomats have agreed a four-month extension to the deadline for an agreement between Iran and world powers on Iran's nuclear programme.

The US says it will unblock $2.8bn in frozen Iranian funds, in return for Iran continuing to convert its stocks of 20%-enriched uranium into fuel, reports BBC.

The talks have aimed to persuade Iran to limit its nuclear programme in exchange for the lifting of sanctions.

World powers suspect Iran seeks atomic weapons, which Iran denies.

The country insists that it is enriching uranium for use in nuclear power stations and for medical purposes.

Reuters reports that negotiations will now resume in September, with a final deadline set for 24 November.

"There are still significant gaps on some core issues which will require more time and effort," said a joint statement issued by EU foreign policy chief Catherine Ashton and Iran's Foreign Minister Mohammad Javad Zarif.

BDST: 1014 HRS, JUL 19, 2014