After talks involving the EU, the United States, Russia, China, Japan and South Korea, a joint statement issued late this week said: "All parties were greatly encouraged by the positive atmosphere and expressed their optimism that the process was now proceeding effectively towards a fruitful conclusion among the six parties in the near future."

The careful wording of the statement appeared to support the EU's optimism.

It said the two potential hosts, the European Union and Japan, had presented "the results of recent intensive bilateral discussions on the balance of roles and responsibilities of host and non-host in the joint realisation of ITER".

Discussions would resume soon to seek a final agreement.

EU sources said Japan had effectively conceded that it would not win the contest and was holding out for industrial and scientific compensation.

A European Commission spokesman stepped back from EU threats to press ahead and build the reactor in France with whatever partners it could find if there was no global agreement.

"We're not there yet. We are still in a multilateral process," spokesman Fabio Fabbi said after the talks.

Nuclear fusion has been touted as a long-term solution to the world's energy problems, as it would be low in pollution and use limitless sea water as fuel.

The process involves sticking atoms together, as opposed to today's nuclear reactors and weapons, which produce energy by blowing atoms apart.

However, 50 years of research have failed to produce a commercially viable fusion reactor.