Britain and the United Arab Emirates signed an initial agreement for co-operation in peaceful use of nuclear energy, the official UAE news agency Wam reported.

'The memorandum of understanding allows the UAE to benefit from the capabilities and high technical expertise of the United Kingdom in the area of peaceful nuclear energy,' Wam quoted foreign trade minister Sheikha Lubna Al Qassimi as saying.

'The agreement sets the framework and mechanisms of co-operation between the two countries in developing the peaceful nuclear infrastructure of the UAE,' Wam said.

The agreement was signed in Abu Dhabi by Qassimi and visiting British Minister of Trade and Investment Digby Jones. In April, the United States signed a similar agreement with the UAE which has promised to be a 'responsible' partner.

The United States is at loggerheads with Iran, just across the Gulf from the UAE, over its nuclear programme and fears that it is trying to build an nuclear bomb.

Iran insists its nuclear programme is for peaceful power generation. The UAE has said it plans to establish a $100 million agency to look into developing nuclear energy to satisfy rising electricity demand as its economy booms on record oil income.

Electricity demand in the Gulf Arab state has rocketed, straining its power grid, as record oil revenues fuel economic expansion and the population mushrooms.

The UAE has promised to draw up laws to govern the sector and establish a nuclear regulatory authority and an international advisory board of nuclear experts as well as to seek assistance from other governments.-Reuters