WASHINGTON/GENEVA (Reuters) - U.S. President George W. Bush believes the Iran nuclear issue can be solved diplomatically and that U.S. allies including Israel favor the same approach, the White House said on Wednesday.

The U.S. position was set out after The New York Times reported last week Israel had practiced a possible military strike against Iran.
The European Union's top diplomat also stressed the diplomatic track, saying Western powers would continue a twin policy of sanctions and diplomacy toward Iran over its nuclear program, despite Tehran's warnings it could backfire.
Asked whether Israeli officials were pressuring the U.S. administration to take military action against Iran before Bush leaves office, White House spokeswoman Dana Perino said the United States and its allies, including Israel, wanted a diplomatic solution.
""President Bush believes that we can solve this issue diplomatically, and that everyone's preference is to solve it diplomatically, not just here in the United States but with our allies and certainly with Israel,"" Perino said.
The dispute between the West and Tehran over Iran's atomic program has sparked fears of a military confrontation that would disrupt vital oil supplies.
The New York Times Friday quoted U.S. officials as saying Israel had carried out a big military exercise in an apparent rehearsal for a potential strike at Iran's nuclear sites.
Israel is widely believed to have the Middle East's only atomic arsenal.
Bush discussed Iran with representatives of UN Security Council members at the White House on Wednesday. ""We talked a little bit about Iran and how the United Nations Security Council is sending a focused message that the world really offers Iran a better way forward than isolation if they will verifiably suspend their enrichment programs,"" he said.
Iran says its nuclear drive is designed to generate electricity.
Iran’s deputy foreign minister was quoted as saying the world's fourth-largest oil producer would withdraw assets from Europe in the face of tightening sanctions against the country.
Another senior official, parliamentary speaker Ali Larijani, warned the West against ""provoking"" the Islamic Republic.
Tehran said Tuesday that new punitive measures imposed on it this week by the 27-nation European Union over its nuclear plans could damage diplomatic efforts to resolve the dispute.
EU foreign policy chief Javier Solana handed Iran an offer on June 14 of trade and other benefits proposed by the United States, Russia, China, Britain, Germany and France in a new bid to end a row that has helped push oil prices to record highs.
Solana told Reuters Wednesday Iran had still not replied to the incentives offer aimed at coaxing it into halting uranium enrichment.
""That is what we were told, that they would think about it and they would give us an answer soon,"" Solana said in Geneva.
""In the meantime, we will keep the double track open,"" he said, referring to carrot-and-stick diplomacy toward Tehran. ""We want to have a solution which is diplomatically negotiated.""
Energy experts are concerned any conflict in Iran could lead to a shutdown of the Strait of Hormuz, a narrow waterway separating Iran from the Arabian Peninsula through which roughly 40 percent of the world's traded oil is shipped.
Iran's Revolutionary Guards warned the United States it would face a ""tragedy"" if it attacked the country.
""If you want to move toward Iran make sure you bring walking sticks and artificial legs because if you came you will not have any legs to return on,"" Mohammad Hejazi, a senior commander of the elite Guards, was quoted as saying.