US President George W Bush is to hold talks with European Union leaders later on Tuesday as they meet in Slovenia for their annual summit, according to BBC.

The BBC`s Oana Lungescu in Ljubljana says they are expected to issue a joint warning to Tehran that more sanctions against Iran`s banks are being readied.

They are pressuring Iran to abandon its nuclear programme, rejecting claims it is solely for peaceful purposes.

Mr Bush`s trip is expected to be his last Europe tour while in office.

Mr Bush`s week-long trip also takes him to Germany, Italy, France, the Vatican and the UK.

The summit will also focus on Zimbabwe, calling for an end to state-sponsored violence and urging the UN secretary general to immediately send a team to monitor human rights, our correspondent says.

`Carrot and stick` policy

There will be a tough joint message to Tehran about further sanctions against Iranian banks linked to nuclear proliferation and terrorism, our correspondent says.

Mr Bush is also expected to apply pressure on individual European businesses to take a harder line.

Barclays Bank, based in Britain, has already responded to US pressure, and ended all dealings with Iran`s Saderat Bank and Bank Melli.

The warning of sanctions is a stick that Washington is keen to wield, but it is ready to give the carrot one more try, our correspondent says.

EU foreign policy chief Javier Solana will go to Iran at the weekend with an upgraded offer of economic and political incentives.

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 - items which can have either a military or civilian purpose.

`No illusions`

As EU leaders prepare to bid goodbye to Mr Bush in Slovenia, they want to focus on what unites Europe and America, our correspondent says.

But on some key challenges like global warming, no-one is expecting a breakthrough, she says.

The US envoy to the EU has warned Europeans not to have any illusions that Washington`s position will change "magically" with a new president.

Ahead of the summit, Slovenian Foreign Minister Dimitrij Rupel made reference to the possible tensions, telling reporters: "As in all relationships, the EU and US sometimes have different views."