UPDATE 1-Obama condemns Ahmadinejad but still wants talks

WASHINGTON, April 21 (Reuters) - President Barack Obama said on Tuesday he was still interested in pursuing talks with Iran, despite the conviction of an Iranian-American journalist and controversial comments by its president on Israel.

"We will continue to pursue the possibility of improved relations and a resolution to some of the critical issues in which there have been differences, particularly around the nuclear issues," Obama said after talks with Jordan's King Abdullah at the White House.

Obama said he wanted tough direct talks with long-time foe Iran "without taking a whole host of other options off the table" -- a phrase that has sometimes been used by past U.S. administrations to signal the possible use of military force.

The Obama administration has warned of moves to impose tougher sanctions if Tehran keeps defying U.N. demands to halt sensitive nuclear work.

Obama condemned Iranian President Mahmoud Ahmadinejad's denunciation of Israel as a racist state at a U.N. conference on racism Monday and said his comments would not only hurt any efforts to improve U.S.-Iranian ties but also undermine Iran's international standing.

"I found many of the statements ... appalling and objectionable," Obama told reporters.

Washington cut ties with Iran shortly after the Islamic revolution in 1979 but Obama is seeking to engage it on a range of issues, including the nuclear dispute.

Iran says it wants to see a real switch in Washington's policies away from those of former President George W. Bush, who led a drive to isolate the country because of its nuclear program. Iran says it only wants to generate electricity, but the United States suspects it seeks to build an atomic bomb.

Iranian-American journalist Roxana Saberi, meanwhile, appealed against her eight-year sentence for espionage, Iran's judiciary said on Tuesday. The United States has dismissed the charges as a fabrication and called for her release. link...