Turkey said on Thursday planned economic sanctions would only target outlawed Kurdish militants and groups providing them with support in northern Iraq.

The government declined to say what the new measures would include but made clear they would spare Turks and Iraqis not connected to the Kurdistan Workers Party (PKK), which has been launching attacks on Turkey from across the border.

Turkey has sent 100,000 troops to the border for a possible push into northern Iraq against PKK militants, but Iraq and the United States have urged Ankara to refrain from a major operation, fearing it could destabilise the region.

Iraqi Prime Minister Nuri al-Maliki and Turkish counterpart Tayyip Erdogan plan to meet on the sidelines of an Iraqi neighbours conference in Istanbul starting on Friday to discuss the threat posed by the PKK, a government spokesman said.

U.S. Secretary of State Condoleezza Rice will also hold talks in Turkey on Friday.

Ankara seeks immediate action from Washington and Baghdad against the PKK amid rising domestic pressure to act after dozens of Turkish soldiers were killed in recent weeks.

But diplomats say Turkey may hold fire on sanctions and major military action to see what results from the talks with Rice and discussions between Erdogan and U.S. President George W. Bush next Monday in Washington.

"We are aware of the goodwill of the Iraqi government in the fight against terrorism. However goodwill is not enough on its own. Therefore our talks with the United States... will be decisive about what steps to take against the terrorist PKK organisation," Foreign Minister Ali Babacan said.

Erdogan said the sanctions measures, agreed at a cabinet meeting on Wednesday, were not yet in force.

"We are targeting the economic sources of the terrorist organisation and those elements providing support to the terrorist organisation," Babacan told reporters.

NATO-member Turkey knows economic sanctions could end up hurting its own economy as much as that of the semi-autonomous Kurdish region of northern Iraq, which is run by Masoud Barzani.

Turkey accuses Barzani and his administration of providing shelter and support to an estimated 3,000 PKK guerrillas.

Barzani denies the charges but says he will not turn over any Kurd to Turkish authorities. Turkish-Iraqi bilateral trade amounts to some $5 billion per year and oil from northern Iraq flows through Turkish pipelines.


TALKS

Rice holds talks with Erdogan and other top officials in the Turkish capital before heading to Istanbul for a meeting of foreign ministers from Iraq's neighbours and major powers that is sure to be dominated by tensions between Ankara and Baghdad.

She has promised "concrete action" and is prodding Iraq, particularly Kurdish authorities in the north, to close PKK bases and arrest leaders to prevent attacks.

"It's absolutely imperative that steps be taken to prevent such PKK attacks in future. Secretary Rice will be discussing this (in Turkey)," U.S. under secretary of state for political affairs Nicholas Burns told reporters in Vienna.

After talks with Barzani in northern Iraq, British Defence Minister Des Browne said firm and resolute action was needed immediately to constrain the PKK, but military action would be in nobody's interest and further dialogue was vital.

Iran's foreign minister arrived for an unexpected visit to Ankara on Thursday after talks in Baghdad. Maliki's government called on Iran to help them avert a Turkish incursion.

Erdogan is under tremendous pressure to act as the military and much of public opinion doubt Washington or Baghdad will crack down on the PKK and Barzani has little incentive to do so.

Analysts question Ankara's willingness to authorise a major incursion, saying Turkish leaders still hope their rhetoric will push U.S. and Iraqi authorities into acting against the PKK.

Turkey's large-scale incursions in 1995 and 1997 failed to dislodge PKK rebels from the Iraqi mountains. NATO's second largest army will want to avoid getting bogged down in difficult terrain as winter looms.

Ankara blames the PKK for the deaths of nearly 40,000 people since the group launched its armed campaign for an ethnic homeland in southeast Turkey in 1984. The United States and European Union, like Turkey, brand the group as terrorist.